Food Logistics Jan 2015 by Supply+Demand Chain/Food Logistics

Food Logistics +

SECTOR REPORTS

• Operator comfort boosts forklift safety • WMS and WCS • Econ Dev: Kentucky

Issue No. 163 January/February 2015

Global Supply Chain Solutions for the Food and Beverage Industry

THE FLEET MANAGER'S 2015 FORECAST Pg. 30

THE WAREHOUSE AS A COMPETITIVE ADVANTAGE

Automation keeps adding ways to streamline inventory flow

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Blog: Sysco/US Foods Merger Stalls; Customers O.K. While Competitors Are Lovin' It

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Could McDonald's Have Prevented A Meat Supplier Closure?

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WEB EXCLUSIVES

Daily news: Cold chain and more FL's educational webinar series WWW.FOODLOGISTICS.COM

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ON THE MENU

JA NUARY /FEB R U ARY 2015 • ISSU E N O . 163

COVER STORY

Warehouse As A 18 The Competitive Advantage

one s, d

Access to a world-class, multi-modal infrastructure and a generous state economic development program are just a few of the benefits. By Cynthia Y. McCann

FEATURE

COLUMNS

Fleet Manager’s 30 The 2015 Forecast

STARTERS 6 FOR Full Throttle Ahead

Execs cite new distribution strategies, regs and driver turnover among key issues. By Lara L. Sowinski

For Food Logistics

A renewed sense of enthusiasm is driving our industry while Food Logistics keeps pace with several new offerings. By Lara L. Sowinski

3PL

Demand 34 Recalls Preparing For The Unexpected

Planning is essential to effective response, consumer safety and minimal business disruption. By Steve Dollase

INSIGHTS 16 COOL Global Cold Storage

Capacity Surges

A global cold storage capacity report from the International Association of Refrigerated Warehouses interprets trends in the market and opportunities for the food and beverage sector. By Elliot Maras

SECTOR REPORTS

36 WAREHOUSING Want A Safer Warehouse? Start With Forklift Users

Using data to manage a fleet of lift trucks pinpoints the safety issues, but keeping the operator comfortable means keeping everyone safe. By Eric Sacharski

(AND MORE) 58 FOOD FOR THOUGHT

& TECHNOLOGY 42 SOFTWARE How Warehouse Analytics

d st n

he e

F&B Incentives

Automation keeps adding ways to streamline inventory flow. By Elliot Maras

entation of SAP distribution 36 center

DEVELOPMENT 48 ECONOMIC Kentucky’s Tasty

Empowers Warehouse Management

Time for seamless integration with demand planning, fulfillment and TMS. By Elliot Maras

Find The Perfect Fit For Warehouse Automation

Expert tips on choosing the best strategy for your warehouse automation strategy. By Clint Lasher

DEPARTMENTS 8 Supply Scan 12 Food on the Move 58 Marketplace

Project Objectives: mechanical, including photocopy, recording or any information storage or retrieval system, without written permission from the publisher.

Food Logistics (USPS 015-667; ISSN 1094-7450 print; ISSN 1930-7527 online) is published ten times per year in Jan/Feb, March, April, May, June, July, August, September, October and Nov/Dec

K New construction High-bay Wareby AC Business Media Inc.,of 201aN.5-aisle Main Street, Fort Atkinson, WI 53538. Periodicals postage paid at Fort Atkinson, WI 53538 and additional mailing offices. POSTMASTER: Send address changes to Food Logistics, PO Box 3605 Northbrook, IL 60065-3605. Canada Post PM40612608. Return Undeliverhouse for production supply and removal able Canadian Addresses to: Food Logistics, Station A, P. O. Box 25542, London, ON N6C 6B2. Subscriptions: US, one year $45, two years $85;

Canada & Mexico, oneshipping year $65, two years $120; International, one year $95, two years $180. All subscriptions must be paid in U.S. funds, drawn K 16 automatic conveyors with sequenced loading series

K Implementation of the production supply via 4 JANUARY/FEBRUARY 2015 • FOOD LOGISTICS Kanban, picking parts and call-off parts

www.foodlogistics.com

K Fully-automated goods receiving with routine test via QIE-integration with ERP K Application of 10 different FLOG_2-5_TOC LS_EM_ES.indd 4

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FOR STARTERS FROM THE EDITOR’S DESK

WWW.FOODLOGISTICS.COM Published by AC Business Media Inc.

Full Throttle Ahead At Food Logistics

elcome to the first Food Logistics issue of 2015. This year’s print line-up includes eight regular issues and two special editions, one devoted to the Food Safety Modernization Act (April) and the other on Software & Technology in the Food Supply Chain (July). We’ve also added a new sector report to the mix: Economic Development. This is an important consideration for food/beverage companies when looking to expand or relocate. The U.S. Midwest (Kentucky) is our first SOWINSKI offering (page 48). In addition, we’re adding content in other areas this year, starting with a new award in March entitled, “Food Logistics’ Champions: Rock Stars of the Supply Chain.” It’s our way of recognizing those in our industry whose achievements, hard work and vision have shaped and attained milestones in safety, efficiency, productivity and innovation throughout the global food supply chain. Some are early pioneers; others are nonconformist thinkers and executive standouts. Our educational webinar series continues to expand with seven events scheduled for 2015. The format, essentially a live, roundtable discussion with a panel of experts, really resonates with our audience. Hot topics like “3PLs” and “Cold Chain” drive the ™ conversation while the audience submits realtime questions to the panel. The year’s trade show schedule is also full for the Food Logistics staff. The Cargo Logistics Canada show in January was exciting and attendance is growing for this new show. We’re also partnering with the show’s planners on Cargo Logistics America, scheduled for December 2-3 in San Diego, Calif. February finds us in Phoenix for the GMA/FMI Trading Partner Alliance (TPA). We’re busy in March, starting with the JOC TPM conference and Cool Cargoes track in Long Beach, the IWLA conference in Savannah, and ProMat in Chicago. That’s a lot for the first quarter. I’ll keep you posted on the remainder of the year. As for our Website and daily e-newsletters, they both provide timely news and commentary related to our industry. All told, my initial take on the year ahead is very positive. While conducting interviews for this issue and in casual conversations with others in our industry, it’s clear that the majority of us are truly enthusiastic about 2015. Enjoy the read.

LARA L. SOWINSKI, EDITOR-IN-CHIEF LSOWINSKI@FOODLOGISTICS.COM

JANUARY/FEBRUARY 2015

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201 N. Main Street, Fort Atkinson, WI 53538 (800) 538-5544 • www.ACBusinessMedia.com PRINT AND DIGITAL STAFF Publisher Jolene Gulley Editor-in-Chief Lara L. Sowinski lsowinski@ACBusinessMedia.com Managing Editor Elliot Maras emaras@ACBusinessMedia.com Assistant Editor Eric Sacharski esacharski@ACBusinessMedia.com Ad Production Manager Cindy Rusch crusch@ACBusinessMedia.com Art Director Kirsten Crock Senior Audience Development Manager Wendy Chady Audience Development Manager Tammy Steller ADVERTISING SALES (800) 538-5544 East Coast Sales Manager Judy Welp (480) 821-1093; Fax: (480) 240-4897 jwelp@ACBusinessMedia.com Midwest/West Sales Manager Carrie Konopacki (920) 542-1236; Fax: (920) 542-1133 201 N. Main Street, Fort Atkinson, WI 53538 ckonopacki@ACBusinessMedia.com National Automotive Sales Tom Lutzke (630) 484-8040; tlutzke@ACBusinessMedia.com EDITORIAL ADVISORY BOARD Smitha G. Stansbury, partner, FDA & Life Sciences Practice, King & Spalding Raymond J. Segat, director, cargo & business development, Vancouver Airport Authority Dr. Barbara Rasco, professor and interim director, School of Food Science, Washington State University CIRCULATION & SUBSCRIPTIONS PO Box 3605, Northbrook, IL 60065-3605 (877) 201-3915, Fax: (800) 543-5055 Email: circ.FoodLogistics@omeda.com LIST RENTAL Elizabeth Jackson, Merit Direct LLC (847) 492-1350, ext. 18, Fax: (847) 492-0085 Email: ejackson@meritdirect.com REPRINT SERVICES Nick Iademarco, Wright’s Media (877) 652-5295, ext. 102 niademarco@wrightsmedia.com AC BUSINESS MEDIA INC. Chairman Anil Narang President and CEO Carl Wistreich Executive Vice President Kris Flitcroft CFO JoAnn Breuchel VP Content Greg Udelhofen VP Marketing Debbie George Digital Operations Manager Nick Raether Digital Sales Manager Monique Terrazas Published and copyrighted 2015 by AC Business Media Inc. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or any information storage or retrieval system, without written permission from the publisher.

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SUPPLY SCAN

D A I LY U P D AT E S AT WWW.FOODLOGISTICS.COM

NE WS FROM ACROSS THE F O O D SU PPLY C H AIN

Regs Galore Hound Food Retailers In 2015 A host of regulations on nutrition, food safety and country-oforigin labels that will be released or take effect this year promises to keep U.S. food retailers on their toes in 2015, according to news reports. Just after Thanksgiving last year, the FDA released its long-awaited rule on menu labeling, which includes extensive requirements for supermarkets. “This was absolutely something that we were not expecting,” said Jennifer Hatcher, senior vice president of government and public affairs at the Food Marketing Institute. Any retailer with 20 or more locations will need to display calorie counts for many items in the deli and bakery within a year.

Sysco/US Foods Merger Hits A Standstill Sysco Corp. said negotiations with antitrust regulators over its

planned acquisition of US Foods Inc. have reached a standstill, signaling increasing chances the government could sue to block the marriage of the two largest U.S. food distributors, despite Sysco’s recently proposed agreement to sell 11 US Foods distribution centers to Performance Food Group Co., according to The Wall Street Journal.

FTC Approves Albertsons And Safeway Merger; Chains To Divest 168 Stores Supermarket chains Albertsons and Safeway agreed to sell 168 stores in eight states to win U.S. antitrust approval for their $9.2 billion merger, the Federal Trade Commission (FTC) said recently, according to Reuters. Albertsons, which has 630 supermarkets under various brand names, and Safeway, which has 1,332 stores, will divest stores in Arizona, California, Montana, Nevada, Oregon, Texas, Washington, and Wyoming, the FTC said. Safeway will be delisted from the New York Stock Exchange, the companies said. The transac-

tion was announced in March.

Target Corp. Pulls The Plug On Canada Stores Target Corp. announced that it plans to discontinue operating stores in Canada through its indirect wholly-owned subsidiary, Target Canada Co. As a part of that process, Target Canada filed an application for protection under the Companies’ Creditors Arrangement Act with the Ontario Superior Court of Justice. Target Canada currently has 133 stores across the country and employs approximately 17,600 people.

Policy Expert: U.S.-Cuba Trade Boom Coming President Obama’s modest easing of the Cuban trade embargo will allow the U.S. to rebuild its economic relationship with Cuba, according to Kent Jones, who specializes in trade policy and institutional issues at Babson College in Babson Park, Mass., writing in the Deseret News in Salt Lake City, Utah. Ending this economically destructive policy completely,

The Obama administration is putting a large dent in the U.S. embargo against Cuba, significantly loosening restrictions on American trade and investment.

however, will require a formal vote by Congress to end the trade restrictions, Jones claims. The modest measures taken so far will only remove transaction costs on the small amount of trade that already exists, Jones writes. Red tape, such as burdensome financial and payment terms, reduces U.S. competitiveness in selling food and humanitarian goods to Cuba, harming mainly U.S. exporters. What’s at stake ultimately is the re-establishment of a thriving trade and investment relationship between the two countries that was interrupted by Castro’s revolution and central planning folly, and then aided and abetted by the embargo, according to Jones.

U.S. IMPORTS OF FRUIT AND VEGETABLES FROM TRANS-PACIFIC PARTNERSHIP (TPP) NATIONS

TPP Nations of Origin for

U.S. Imports of Fruit and Vegetables

from TPP Nations

2013 2014

$16

12%

$14 $12

62%

Billions

19%

$10 $8 $6 $4 $2 $0

• Mexico • Canada • Chile • Peru • New Zealand

• Australia • Vietnam • Japan • Malaysia • Singapore

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Vegetables

Fruits

Total

All data provided by Zepol. Visit zepol. com for a Free Trial

• FOOD LOGISTICS

The Trans-Pacific Partnership (TPP) is a proposed trade agreement that’s currently in the negotiating stages between 12 countries: the United States, Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The partnership has been a topic of debate over the last few months, but there’s no dispute that overall the U.S. trade is huge with these nations. In fact, Zepol’s data shows that TPP countries make up 38 percent of total U.S. imports and 45 percent of total U.S. exports. Even the produce trade with TPP nations is large. In 2014, (from January to November) the United States imported over $14 billion in fruits and vegetables from TPP countries. Most of the imports come from Mexico (62 percent), Canada (19 percent), and Chile (12 percent), and the numbers are climbing. Compared with 2013, U.S. fruit and vegetable imports rose by 7 percent in 2014 from TPP nations, 2 percent higher than the average produce increase.

Source: Zepol, www.zepol.com www.foodlogistics.com

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Pallet Flow

Push Back

Wide Span

Selective Rack

Cantilever

Warehouse Racking

SolutionS 8 7 7. 6 3 2 . 2 5 8 9

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SUPPLY SCAN

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NEWS FROM A CROS S THE F O O D SU PPLY C H AIN

USDA Seeks $4.9 Billion For Food Protection, FSMA Implementation The U.S. Food and Drug Administration is requesting a budget of $4.9 billion to protect and promote public health as part of the President’s fiscal 2016 budget – a 9 percent increase over the enacted budget for 2015. The overall request includes $147.7 million in budget authority for initiatives tied to several key areas, including the implementation of the Food Safety Modernization Act (FSMA) and the management of medical products issues.

Inspectors Warn Against USDA’s High-Speed Hog Inspection Program The Government Accountability Project (GAP) released evidence it has gathered from federal meat inspector whistleblowers who currently work at pork processing plants participating in a high-speed inspection pilot program. These whistleblowers voiced concerns regarding the program and warned about the potential public health implications if this plan is instituted on a national level. GAP is making publicly available affidavits from four U.S. Department of Agriculture (USDA) inspectors that illustrate serious concerns with the agency pilot program that increases the speed of processing lines and reduces the number of trained USDA inspection personnel in the hog plants.

Mondelez International Builds $90 Million Biscuit Plant In Bahrain Mondelez International laid the cornerstone for construction of its new $90 million biscuit plant in Bahrain as the world’s leading maker of chocolate, biscuits, gum and candy seeks to tap rising demand in the Middle East and Africa for

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Bahrain’s minister of industry and commerce, Dr. Hassan Fakhro (left) shakes hands with Vishal Tikku, Mondelez International’s area vice president for the Middle East.

company brands such as Oreo, Ritz and TUC biscuits. The company announced the project in October 2014. Full commercial production is scheduled to start early next year. “Demand for our biscuits in the Middle East and Africa has been growing at double-digit rates and investing in a state-of-the-art facility in Bahrain will enable us to capitalize on this,” said Daniel Myers, Mondelez International executive vice president, integrated supply chain. “This new investment is part of our journey to reinvent our supply chain around the world to meet growth demands, while also reducing costs and improving productivity.” Mondelez International’s supplychain reinvention plan is expected to deliver $3 billion in gross productivity savings, $1.5 billion in net savings and $1 billion in incremental cash from 2014 to 2016. These savings will be a primary driver of significant improvements in the company’s base operatingincome margin in the near term.

Locally Produced Food Sales Reach $12 Billion; Will Nearly Double In The Next Four Years Like organic products before them, locally-produced foods are stepping out of the shadow of their once “quirky niche” designation to claim a much more prominent— and permanent—place in the U.S. food and beverage retail landscape. Market research publisher Package Facts estimates that local foods generated $12 billion in sales in 2014, accounting for 2 percent of • FOOD LOGISTICS

total U.S. retail sales of foods and beverages. Looking ahead, Packaged Facts anticipates that over the next five years, local foods will grow faster than the annual pace of total food and beverage sales to approach $20 billion in 2019. The findings were published in the recently released report, “Shopping for Local Foods in the U.S.”

Global Food Traceability Market To Post Fast Growth To 2019 The global food traceability market will grow 9.88 percent annually according to the newlyreleased report, Global Food Traceability Report 2015-2019, from Research and Markets. The emergence of an analytics system is one of the major trends in this market. Food traceability systems are used to keep a record of the flow of products meant for human consumption and product attributes throughout the production process or logistics network. Since food production and its distribution is a complex process, companies consider food traceability system as the best tool to solve food-related challenges. Food traceability helps companies make fresh food products available to their consumers, thereby helping in reducing food-borne diseases. In many countries, such as the U.S. and the U.K., consumers are ready to pay more for products having a food traceability and point-of-origin certificate. Technologies such as infrared, RFID, biometrics and sensors have made food traceability convenient for companies in the food industry.

UN: Deadly Disease Threatens Global Banana Production The United Nations Food and Agriculture Organization (FAO) has warned that without global efforts to respond to a fungal disease affecting banana production, the $36 billion global industry, which provides a source of income

or food to some 400 million people around the world, is under threat, according to The Jamaica Observer. The agency and its partners said $47 million is needed to tackle the new and deadly Tropical Race 4 (TR4) strain of Fusarium wilt disease, part of which would be used to provide swift, on-the-ground assistance to countries facing new outbreaks. “Fusarium wilt disease has been a major challenge in the history of banana production,” said FAO’s head of plant protection, Clayton Campanhola. Yellow and wilted leaves are typical symptoms of Fusarium wilt. The yellowing typically progresses from the older to the younger leaves.

“After the devastation TR4 recently caused to bananas in parts of Asia, we have to fear its spread in Africa and the Middle East and also to Latin America (in the Caribbean), and consider it as a threat to production globally,” he added.

J. M. Smucker Co. To Acquire Big Heart Pet Brands The J. M. Smucker Co. has entered into a definitive agreement to acquire Big Heart Pet Brands in a cash and stock transaction valued at approximately $5.8 billion, which includes approximately $2.6 billion of net debt. Big Heart Pet Brands is the largest stand-alone producer, distributor and marketer of premiumquality, branded pet food and pet snacks in the U.S. The company estimates Big Heart Pet Brands’ net sales will be approximately $2.3 billion and adjusted earnings before interest, taxes, depreciation, and amortization will be approxi-

www.foodlogistics.com

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FDA Commissioner Margaret Hamburg Resigns Dr. Margaret Hamburg, who as commissioner of the Food and Drug Administration (FDA) for almost six years has overseen public health initiatives ranging from tobacco control and food safety to personalized medicine and drug approvals, is stepping down. Hamburg, one of the longest-serving FDA commissioners in the Margaret Hamburg modern era, told Reuters in an interview that her decision was prompted by the heavy demands of the job and the sheer length of time she has held the position. “This is a very challenging job full of opportunities to make a huge and enduring difference,” she said, “but it is 24/7 and there are really, really difficult decisions to make.”

China Bans U.S. Poultry And Egg Imports Over Avian Flu The Chinese government said that it will ban all imports of U.S. poultry and egg products because of recent detections in the U.S. of highly pathogenic avian influenza (HPAI) in backyard poultry and wild birds in the Pacific Northwest, the U.S. Poultry & Egg Import Council reported. In a joint announcement posted on official websites in China, the Ministry of Agriculture (MOA) and the General Administration for Quality Supervision, Inspection and Quarantine (AQSIQ) imposed nationwide restrictions on imports of processed and unprocessed U.S. poultry and eggs, effective Jan. 8. The ban also applies to breeding stock, which includes live chicks and hatching eggs. The ban is in response to a December detection of a highly-pathogenic strain of H5N8 influenza in wild birds and in a backyard flock of guinea hens and chickens in Oregon, along with separate H5N2 HPAI detections in wild birds in California and Washington. MOA and AQSIQ imposed the restrictions despite assurances by the USDA’s Animal and Plant Health Inspection Service that the influenza virus has not been found in any commercial poultry flock in the U.S. China is a key export market for U.S. chicken, turkey and duck products. From January through November last year, U.S. exports to China reached more than $272 million.

must not be produced in “old” packages after Dec. 13, 2014. Food in packages with “old” labels may, however, be on the market until the end of its durability date. The new rules were changed before taking effect, the lawyers noted. The Ministry of Food has requested a corrigendum of Regulation 1169/2011, which means that the following rules of law in the regulation are changed:

• “Quickly frozen” will be changed to “deep frozen.” • “Sequestrants” will be changed to “Stabiliser” such that it now says both “Sequestrants” and “Stabiliser.” • “Mindst holdbar til” will be changed to “bedst før.” • “Mindst holdbar til og med” will be changed to “bedst før udgangen af.” • “Nutritional reference values” has been changed to “nutrient reference values” (NRV).

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New Regulation Prompts Changes To Food Labels In European Union As of Dec. 14, 2014, all food labels in the European Union must be designed in accordance with the new labelling rules in Regulation no. 1169/2011 on the provision of food information to consumers, according to attorneys at Bech-Bruun in Copenhagen, Denmark. Food www.foodlogistics.com

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• JANUARY/FEBRUARY 2015

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FOOD ON THE MOVE LOGISTICS TRENDS IN OUR INDUSTRY

Panama Canal Shipping Boom Set To Let Loose Shipping analyst Drewry Maritime Research expects transhipment activity in Panama to grow strongly once the expansion of the Panama Canal is completed, according to Fruitnet.com. The expansion project, which is due for completion next year, will enable 14,000 TEU vessels to pass through the canal, increasing demand for transhipment options. Drewry is forecasting a doubledigit jump in transhipment activity for 2016 and annual growth of 5 percent thereafter, leading to Panama Pacific coast throughput of 6m TEU by 2024. Transhipment activity in the wider Central America/Caribbean region is also set to grow as a result of the expansion.

Dimensional Weight Pricing Surprises Online Merchants Close to a third of online merchants who ship orders via FedEx and UPS are unaware of the significant changes to rates that took effect at the beginning of this year due to dimensional weight pricing, according to Endicia, a Palo Alto, Calif.-based company that helps businesses with USPS shipping. Endicia surveyed 700 businesses and found

UPS explains dimensional weight packaging on its website. Divide the cubic size in inches by 166 to determine dimensional weight in pounds.

that 28 percent of online businesses hadn’t heard of dimensional weight pricing that has already taken effect.

Maersk Line To Close Pacific Shipping Service Maersk Line will close its Trans-Pacific 5 (TP5) U.S.-flag service operated by its Maersk Line Ltd. affiliate as part of a strategy to eliminate unprofitable Pacific services, according to Hellenic Shipping News. The end of the current TP5 service from North Asia to Los Angeles-Long Beach and Oakland, Calif. using five older Panamax, U.S.-flagged container ships will not produce

a significant reduction in the overall container ship capacity on the route, according to experts, because it is a relatively small service. The five ships on the route include four 4,300-TEU vessels formerly owned by SeaLand Service and one ship chartered from Mediterranean Shipping Co.

Lineage Logistics Acquires Columbia Colstor Lineage Logistics has acquired Columbia Colstor, a third-party warehousing and logistics company based in Moses Lake, Wash. With the acquisition of Columbia Colstor, Lineage Logistics doubles its presence in the Pacific Northwest to 11 locations.

UASC Orders 2,000 Reefer Containers United Arab Shipping Co. (UASC), a container shipping line and global carrier, has ordered 2,000 reefer containers from Daikin, according to TradeArabia.com. The order marks the first milestone in the expansion of UASC’s reefer services and underpins the company’s ongoing investment in the cuttingedge, energy-efficient solutions for the carriage of frozen and chilled cargoes.

DAT SOLUTIONS’ MONTHLY FREIGHT REPORT

Fewer Loads, More Trucks

anuary and February are slow months in the spot freight market, and after last year’s extreme weather-driven demand for trucks, 2015 is taking on a more typical pattern. Load volume and rates for truckload refrigerated freight drifted downward in January compared to December, according to DAT Solutions, which operates the DAT network of load boards. The national average spot rate for reefer freight was $2.31 per mile (including fuel surcharge), down 8 cents compared to December, but still 15 cents higher than January 2014. There were 11 percent fewer refrigerated loads posted in January compared to December, while the number of available trucks increased by 3.3 percent. The load-to-truck ratio for temperaturecontrolled freight dipped 14 percent to 9.1, meaning there was an average of 9.1 reefer loads posted for every available reefer vehicle on DAT load boards in January. Load-to-truck ratios indicate market demand and capacity, and changes signal shifts in spot market rates. Another trend to watch: low on-highway diesel prices, which tend to have a dampening effect on spot market rates. When fuel prices slip, the surcharge drops and the total rate typically declines.

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FOOD ON THE MOVE LOGISTICS TRENDS IN OUR INDUSTRY

Alibaba Drones Fly Over Beijing While Amazon Pleads For U.S. Tests

Tiger Cool Express Expands Its Container Fleet Tiger Cool Express LLC, a transporter of produce and food products in temperaturecontrolled intermodal containers, has added 35 domestic containers to its fleet, according to Railway Age. The new acquisition marks an increase in the fleet size by 17.5 percent, to 234 containers. The new containers match Tiger Cool Express’s current specifications. They are Hyundai boxes with Carrier X4-7300 refrigeration units and iBright telematics. The insulated containers are built to hold temperatures to minus 20 degrees Fahrenheit. There are four internal sensors that measure temperature, including a coring thermometer, to manage and monitor the environment inside the container and record that information during the trip. Additional sensors monitor door openings and closings. Cellular sensors monitor location speed and direction; they are equipped with geo-fencing capability to alert the shipper and the customer if the equipment is out of route.

New York Considers Ending Container Freight Charge Legislation to eliminate the Container Freight Charge (CFC) has been approved by the New York Senate Corporations, Authorities and Commissions Committee. The bill, SB 2648, has been referred to the senate finance committee, according to Maersk Line. The legistlation has also been introduced in the New York State Assembly, A 2070. The Port Authority of New York 14

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libaba Group Holding Ltd. is making its first trial drone deliveries in China, as e-commerce rival Amazon. com Inc. struggles to start a similar program in the U.S., according to Bloomberg News. Alibaba, Asia’s largest Internet company, Google tests its Project Wing drones in Australia. is partnering with Shanghai YTO Credit: Image courtesy of Alibaba’s news website www.alizila.com. Express Logistics Co. to deliver ginger tea packets to 450 Chinese customers who volunteered for the one-time drone tests, according to an e-mail statement from Alibaba. Remote-controlled helicopters were expected to distribute 50 parcels from Alibaba’s Taobabo Marketplace in Beijing before moving to Shanghai and Guangzhou.

and New Jersey is the only U.S. authority to impose a cargo facility charge on all containers, including empties, according to Maersk Line. It charges $4.95 for 20-foot containers, $9.90 for 40-foot containers, and $1.11 per unit for vehicle cargo.

Swiss WorldCargo Partnership To Enhance Temperature-Controlled Air Freight Swiss WorldCargo, the airfreight division of Swiss International Air Lines Ltd., and its partner ground handling companies Cargologic AG and SATS, have concluded a memorandum of understanding (MoU) aimed at further enhancing cargo handling and information services. The MoU, which was signed in Zurich, outlines the basis for the partners’ future collaborations and alignments in areas such as quality, e-initiatives, temperature-controlled transport management and specialized handling solutions. Within the new alliance, Swiss WorldCargo, SATS and Cargologic will share knowledge and best practices and will collaborate in the fields of information technology, facility development, joint training, staff/management attachments and joint workshops.

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‘Uber For Logistics’ Lalamove Gets $10 Million For China/Southeast Asia Expansion Lalamove, an Uber-like service for logistics, has raised $10 million to expand its presence across Asia, where it already operates in six cities, according to Tech Crunch. The company, which began in Hong Kong in December 2013, offers iOS and Android apps that allow customers to move items across a city using its network of “regular” drivers. Its business model is akin to an “Uber for logistics” since anyone with a valid license and car can sign up to be a driver. The $10 million round is led by China’s Crystal Stream Capital, and it includes participation from Geek Founders, Mindworks Ventures, Sirius Venture Capital and Aria Group. Lalamove said a number of unnamed investors also took part.

C.H. Robinson Will Buy Freightquote.com C.H. Robinson has reached an agreement to acquire Freightquote.com, Inc. for $365 million in cash. The agreement is subject to certain customary closing conditions, including regulatory approval. Closing of the acquiwww.foodlogistics.com

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sition is expected to occur in the first quarter of 2015. C.H. Robinson will likely increase its existing revolving credit facility to finance the acquisition. Freightquote is a privately-held freight broker providing services throughout North America. Freightquote’s calendar 2014 gross revenues are projected to be approximately $623 million,

Teamsters Cite Foodservice Distributors’ Safety Violations In analyzing safety violations of broadline foodservice distributors based on Federal Motor Carrier Safety Administration (FMCSA) data, the Teamsters claim the data reveals that Performance Food Group (PFG), the third-largest competitor, has the highest number of violations in most categories when compared on a per-driver, per-truck or per-inspection basis over a two-year period, while Reinhart Foodservice tops the list

of vehicle maintenance violations on a pervehicle basis.

FedEx Corp. To Acquire GENCO FedEx Corp. has signed an agreement to acquire Pittsburgh, Pa.-based GENCO, one of the largest third-party logistics providers in North America, for an undisclosed sum. FedEx noted that GENCO, with a portfolio of supply chain services, will expand FedEx service offerings in the evolving retail and e-commerce markets. Terms of the transaction were not disclosed.

Thermo King: Temp Control Technology Will Slow Produce Aging During Transport

cargo, the company noted. “The Optima unit is a controlled atmosphere using active technology, a point we like to stress because there are a couple of other so-called controlled atmosphere units on the market, but we are proud that our units are a genuine active system,” said Michel van van Roozendaal, vice president for the company’s global marine, rail and bus segment. “The whole idea and notion of this product is that it brings the atmosphere inside the container, for let’s say fruit or vegetables, very quickly to the desired mixture between nitrogen, oxygen and carbon dioxide so that you can control the ripening process.”

DHL Worldwide Buys Mayne Logistics Loomis in Canada

Thermo King’s new Magnum Plus Optima active technology is designed to slow down the aging and ripening process of fruit and vegetables during shipping. Recently showcased at a trade event in Rotterdam in the Netherlands, the technology appeals to global exporters looking for cost-effective atmosphere control options for perishable

DHL Worldwide Express has completed its purchase of Mayne Logistics Loomis. Under the DHL Canada banner, the combined company will be the third largest express transportation provider in Canada. Eric de Maat, existing president of DHL Canada, will assume this role for the newlyreorganized company. Representatives from both DHL and Loomis will lead the combined organization.

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COOL INSIGHTS BY ELLIOT MARAS

Analyzing The Rise In Global Cold Storage Capacity

nyone with their ear to the ground for the last six years knows that if there was a global recession, you couldn’t tell it from global cold chain activity. The Global Cold Chain Alliance’s recently-released Global Cold Storage Capacity Report by the International Association of Refrigerated Warehouses (IARW) provides a lot of data that confirms the cold chain has been on a significant growth curve during the “Great Recession,” and it is expected to continue despite economic stagnation in some parts of the globe. The total capacity of refrigerated warehouses was estimated at 552 million cubic meters worldwide in 2014, an increase of 92 million cubic meters (20 percent) over 2012. For companies looking to learn about growth opportunities in the global cold chain, this report provides an excellent analysis of cold storage capacity worldwide. The IARW has been collecting and analyzing data on the global cold storage industry since 1998. This report provides industry growth trends, market development indicators, and market comparisons. Companies planning for growth are oftentimes confused

Austria Netherlands Canada Italy Ireland Greece Belgium Denmark United States Sweden Portugal Germany France Poland Brazil Mexico Namibia Chile Great Britain China Peru India Turkey

4.18 4.51 4.69 4.71 4.84 5.41 5.80 8.73 9.29 9.82 10.80 11.23 11.64 19.70 26.25 26.51 27.41 30.05 31.21 34.67 36.50 42.99 68.11

COMPOUND ANNUAL GROWTH RATE IN REFRIGERATED WAREHOUSE CAPACITY, in % by Country, Annualized for 2008—2014.

Source: International Association of Refrigerated Warehouses.

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by the large amount of information available from government sources, associations, private marketing firms and consultants. The IARW’s report offers a good starting point, as it highlights key considerations such as the number of existing cold warehouses in different countries, the growth of warehouse space, population densities, population incomes and quality of transportation systems.

A business planning tool Whether you are a retailer, foodservice operator, wholesaler, 3PL, material handling equipment provider, supply chain software vendor, distribution systems integrator or a consultant, this report includes useful market insights and quantitative data to assist in business planning. A food processor looking to expand but uncertain what geographic markets offer the best opportunities will find it helpful to know how much cold storage capacity exists in the 31 countries studied, the amount of cold warehouse space compared to urban population, how much cold storage capacity has increased in the last four years, the level of personal, disposable income, and how fast the population’s income is changing. Approximately 17 million cubic meters of additional refrigerated warehouse capacity has been added to the GCCA database from countries that are covered by the 2014 survey for the first time: Egypt, Iran, Kuwait, Libya, El Salvador, Afghanistan, Dominican Republic and Oman. One theme that emerges from 42 pages of analysis and charts is that substantial export opportunities exist for cold chain service and storage providers. Noting that roads, bridges and ports must be accessible for cold chain service providers to expand, the report references the transportation quality index published by the World Economic Forum (WEF). A 1-percent increase in a country’s score in the WEF transportation index will deliver a 6to 8-percent gain in capacity of refrigerated warehousing. Through its Human Capital Report, the WEF provides a long-term

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insight into how well countries are utilizing their human capital and maintaining workforces that are prepared for the competitive economic environment. For example, Switzerland’s score of 6.51 indicates a better quality of domestic transport than other countries, albeit closely trailed by Finland, Japan, Spain and United Arab Emirates. Countries leading refrigerated capacity growth since 2008 are Turkey, India, Peru, and China. These countries have each expanded refrigerated warehousing by 35 percent or more annually over the last six years. India, China, and Turkey have the highest long-term growth rates. Capacity in 13 countries grew faster than 10 percent annually since 2008.

India surpasses the U.S. India has surpassed the U.S. as the country having the greatest amount of refrigerated warehouse space. The revenue of India’s cold storage businesses is approximately $8 billion and revenue is growing at a pace of 25 percent per year. Household income is cited as the main driver for market penetration of refrigerated warehousing worldwide. The report presents a comparison of warehouse capacity and growth in consumers’ incomes. The increase in household purchasing power is accompanied by changes in preferences favoring largescale shopping formats such as supermarkets and hypermarkets. Because the report sheds light on the relationship between reliable transportation systems and market growth opportunities, readers will gain a stronger understanding of the need for the cold chain industry to participate in public policy initiatives. Hopefully, readers will recognize the need to support trade association lobbying and research. Any company participating in the global cold chain faces challenges in such a fast changing industry. The GCCA/IARW report can help a company plan its growth strategy. The report is free to GCCA members. For information, visit www.gcca.org or call 703-373-4300. ◆ www.foodlogistics.com

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C O V E R

S T O R Y

The

WAREHOUSE As A Competitive Advantage Automation keeps adding ways to streamline inventory flow. By Elliot Maras

an the warehouse play a bigger role in driving growth and profitability in the food and beverage (f&b) industry? Can investing in the warehouse actually improve a companyâ&#x20AC;&#x2122;s ability to serve customers more efficiently? For such investments to happen, a revolution may be needed in how f&b companies view the warehouse. And a revolution of sorts is taking shape, thanks to evolving automation technology. Companies are finding that automated storage and retrieval, automatic guided vehicles, goods-to-person picking systems, voice-recognition-based picking and software-managed inventory systems all help improve operating efficiency.

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â&#x20AC;˘ FOOD LOGISTICS

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With operating costs rising (especially labor) and omni-channel distribution creating new demands, supply chain decision makers realize they need to improve distribution capabilities and efficiencies. By making an operation more efficient, automation can allow a warehouse to support faster growth, increase productivity, reduce labor, maximize space, improve sustainability and meet stricter government product tracking rules. While there are no statistics on the current level of automation in f&b warehouses, system providers agree most f&b warehouses primarily rely on manual processes. One reason is that companies involved in the production of food and beverages have long favored production improvements over investing in warehousing. Another reason is that companies focused on f&b distribution

have long viewed the warehouse as a cost more than a profitability tool. In addition, the cost of automation has been hard for companies to justify, given that payback has historically been five years or more. This article examines market trends that impact warehouse inventory management and some of the new technologies designed to help f&b decision makers address current and future needs. Not every warehouse has use for every type of automation. Some companies don’t need or can’t yet afford a fullyautomated warehouse. Others will thrive as a result of automating every possible element. “The trick to warehousing is eliminating human touches,” says Tony Vercillo, Ph.D., who operates IFMC, Inc., a Yorba Linda, Calif.-based supply chain consultancy. “Every time a human touches a pallet or a case, an expense occurs. Technology should be used to reduce the number of touches and steps within the warehouse process.” “Automation has provided an easier method of getting our products to our customers,” says Karen Mathews, senior program manager of warehouse automation at The Coca-Cola Co.’s Grand Rapid,

•

Witron’s palletizing machine streamlines orders in a warehouse. Witron

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FOOD LOGISTICS

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Mich. warehouse. “In an automated world, building a pallet is less demanding physically for the employees since they place products on a belt that is at the same height with every pick, eliminating the bending and reaching that a manual build requires. The automated system also uses an automated stretchwrapper that better secures the load to each pallet compared to an employee manually wrapping a pallet, ensuring our product is delivered securely to our customers.” Identifying the most sensible solution isn’t the only challenge facing decision makers, Vercillo adds. For companies to deploy new technologies successfully, they need to have a technology implementation plan. Vercillo says half of warehouse technology implementations fail, usually due to poor planning. Companies should consider what equipment they are already using to run their warehouses. “The front end and back end systems must talk to each other,” Vercillo says.

sales manager at SSI Schaefer, the Germanybased logistics provider, referring to the conversion of certain stores to serve as sortation centers to buffer and sequence orders for delivery to retail destinations. “You almost have to treat it (the ‘dark’ store) like an e-commerce environment,” says Brian Sherman, vice president of sales and engineering at Arlington Heights, Ill.-based Witron Integrated Logistics Corp. While supply chain managers have to consider the

• Opex Corp.’s robotic picking and

replenishment has reduced labor required for e-commerce retailers. Opex Corp

• Robots build pallets at the Coca Cola Co. warehouse in Grand Rapids, Mich. Coca Cola Co.

return on investment of the automated systems, Sherman says full-scale automation for case picking can make sense for a company handling 10,000 to 20,000 SKUs. Contributing to the demand for more smaller orders has been SKU proliferation, a trend that has grabbed the f&b sector as much as any consumer goods industry. “Ebbs and flows have always been an issue, but the lows and highs are getting more extreme,” says Dan Sanker, president of

E-Commerce raises interest The growth of e-commerce has raised interest in the ability to fulfill smaller orders and deliver in shorter time periods. And while e-commerce has grabbed a lot of attention recently, it is not the only reason the supply chain has recognized the need to handle more smaller orders faster. Retailers are moving to smaller size stores, reversing the “mega store” trend of the previous two decades, fueling more smaller orders. “’Dark stores’ are popping up,” observes Dave Simpson, executive 20

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CaseStack, the Santa Monica, Calif.-based logistic solutions provider. “Hiring people just for seasons is not efficient, and it usually doesn’t work well for associates. Automation presents solutions. We are all getting better at applying warehouse control systems, warehouse management system modules, and automated storage and retrieval systems. In addition, there is a consistent flow of new technology around voice-managed and lightdirected order fulfillment; there are package sorters and pallet conveyors, and there are even new trailer loading tools.” The need to manage a larger selection of products for more order sizes requires distribution centers (DCs) to manage outbound pallet loads differently. DCs are creating more mixed pallets that allow replenishment stock to be delivered directly to the appropriate store. In a manual DC operation, it is difficult to custom build pallets to unique store specifications. But with robotic palletizers deployed in an automated case picking system, the process is easily managed by warehouse management software. Through the use of various automation technologies, the sequencing and palletization of products for mixed SKU pallets can be done to satisfy client needs, notes Richard Lanpheare, director of business development at Retrotech Inc., the Rochester, N.Y.-based system engineering and integration firm. The sequencing process is not only accurate; it’s considerably faster than manually creating pallets and minimizes product damage due to human-related incidents.

• A worker in a cold storage facility uses the viastore WMS via radio frequency for paperless picking. Viastore

Motion Analysis Kit Offers Insight On Stacker Crane Performance

SI Technics’ Motion Analysis Kit/Service identifies hidden performance issues that cause mechanical failures and low throughput in stacker cranes. “The kit is designed as a tool that can analyze the behavior of any crane system used in AS/RS in real time,” says Tom Anderson, general manager for North America. The kit records a crane’s actual motion path to determine how the system moves and positions with and without load. The analysis highlights motion-related conditions and weak spots, such as mast oscillations, undershooting or overshooting at the target position, unnecessary creeping speed and non-linear system behavior that can affect mechanical components like gear boxes, motors and drives, and offers insights into system positioning performance. The motion analyzing software employed with the kit is the same software that is resident on PSI Technics’ ARATEC intelligent positioning solution. “TheARATEC uses a self-learning algorithm that

Smaller orders also require sortation of smaller packages, says Mark Steinkamp, director of solutions development at Intelligrated, the Mason, Ohio-based material handling solutions provider. A cross-belt sorter can sort cases, totes and polybags without the touch of a human hand, preserving product integrity and increasing throughput. A cross-belt sorter is a conveyor sorting system that uses a series of carriers mounted on a conveyor to sort materials. Each carrier has a small belt conveyor mounted on top of it that runs perpendicular to the main conveyor. When it arrives at a sort point, the conveyor on the carrier will spin, moving the materials to the side of the

adapts to a user’s stacker crane,” Anderson says. “The system calculates motion profiles, placing particular emphasis on maximum speed and acceleration without filters or damping, and positions stacker cranes fast yet gently to minimize system wear and tear. And the ARATEC compensates for issues that affect crane positioning over time, such as friction, load changes or wheel and rail wear. The ARATEC takes all the different conditions that affect how a crane positions into account,” says Anderson. “We are actually optimizing the movement of the crane.” During system operation, the ARATEC uses real-time feedback from optical distance meters to monitor the stacker crane‘s movements. It optimizes the motion path in real time and completes storage and retrieval tasks within the shortest possible time, Anderson says. The Motion Analysis Kit/Service can be used to identify positioning disturbances and weaknesses of traditional PLC- and drive-based positioning approaches. ◆

main conveyor (usually onto another conveyor, down a chute, or into a container). “The labor benefit is huge,” Steinkamp says. “When customers want a specific stock keeping unit dropped on their floor, or are interested in executing a particular promotion, those are logistically complex requests,” says Brandi Shortt, vice president of strategic execution and field operations at The CocaCola Co. “Thanks to warehouse automation, innovation becomes more cost-effective.” “Across the system, customers want more variety,” Shortt continues. “The trend toward more choices means we need to create mixedproduct pallets. In turn, we need larger pick floors, which can cause congestion. An automated system alleviates the complexity that would otherwise result from such customization. Another advantage of warehouse automation is that we are able to build more stable pallets. For example, in our warehouse in Grand Rapids, Mich., pickers select the cases and place them on the belt; the belt brings them to the robots; and the robots build the pallets – all inside the warehouse.” Automated technologies can also produce savings in inventory storage costs and can improve warehouse space by utilizing vertical and horizontal space more efficiently to offer greater storage density.

Goods-to-person systems arrive Automated goods-to-person picking systems represent a leading area of warehouse investment. These solutions store cartons, totes and 22

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trays into high-density storage modules, such as AS/RSs, shuttles, carousels and robotic systems. As orders are filled, SKUs are automatically delivered to a workstation. An automated picking system, such as pick-tolight, voice- or screen-based technology, then directs the operator at the workstation to pick a specific quantity and place it into a specific order carton or tote. Software-driven picking systems include horizontal carousels, vertical carousels and vertical lift modules, says Christina Dube, marketing communications manager at Kardex Remstar, a Westbrook, Me.-based automated storage and retrieval solutions provider. These systems can cut fulfillment time, labor and warehouse space while speeding throughput, Dube says. Horizontal carousels consist of bins and shelves mounted on a horizontal track which rotates to deliver items to a fixed, ground-level location. The picker retrieves the item and consolidates batches of items to fill orders. Vertical carousels have a series of shelves or carriers that rotate along a track in the vertical axis and bring items to the worker at the ground level. Vertical lift modules operate like an elevator with a shaft in the middle and two columns of shelving or trays in the front and back. A mechanism in the center auto-

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matically locates and retrieves the stored trays from both columns and brings them to the picker at a pick window.

solution adapts to a variety of work flows and changing business requirements. Intelligrated

Europe leads the U.S. in automation As technology evolves, investment in warehouse automation continues to grow. Europe, where warehousing costs are higher and land is less available, leads the U.S. in this area. The Wall Street Journal recently reported, for example, that a twocenturies’ old German brewer, Badische, Staatsbrauerei Rothhaus AG, recently bought four robots after discovering that one robot can sort through 30,000 bottles per hour, which speeds delivery, especially during peak holiday periods. The IRB7600 robot from Zurich, Switzerland-based ABB Ltd. allows the brewer to fill customer orders faster and has become a competitive advantage. In the U.S., investment has been less aggressive, but is on the upswing. Southern Wine & Spirits of America, a Miami, Fla.-based, nationwide distributor of wine and spirits, recently opened a 334,000-square-foot warehouse in Union

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• Intelligrated’s automatic fullfillment

City, Calif. housing the company’s first fourhigh rack pick module. Four AS/RSs refill pallets automatically; each can process 80 pallets per hour. The AS/RS, developed in partnership with W&H Systems, stores 24,750 pallets and can store up to 10 pallets deep. “We tore down the existing Atlantic Street structure to invest in the development of this state-of-the-art facility that will not only drive value for our trading partners, but also drive internal operational efficiencies that will allow Southern to remain competitive in this everchanging and highly competitive wholesale environment,” says Wayne Chaplin, Southern Wine & Spirits president and CEO. Chris Castaldi, director of business development at W&H Systems, observes that automation has evolved slower on the distribution side of the f&b industry compared to the production side since distribution tasks are less uniform. “It’s hard for them (f&b distributors) to pin down an automation system that would be flexible enough to change with whims of how customers want their product to be stored and retrieved,” says Jeff Hedges, president of the materials handling division at Opex Corp., the Moorestown, N.J.-based picking solutions provider. iHerb.com, a Moreno Valley, Calif.-based nutritional supplement e-commerce retailer, has been able to quickly ship a high volume of small orders domestically and internationally, thanks in large measure to a “goods to person” inventory and delivery system from Opex Corp. iHerb.com, which carries more www.foodlogistics.com

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handling up to four cases simultaneously and an integrated, stack-and-wrap system. An Alvey robotic mixed-load order fulfillment solution palletizes and depalletizes partial and mixed-load pallets. The robotic depalletizer has vision technology to identify products and positions to accommodate different SKUs and load patterns. An integrated, stack-and-wrap system ensures load stability and has integrated controls for robotics and stretch wrapping on the same platform. Shuttle technology will play a bigger role as f&b DCs handle more small orders in shorter time windows, driven by the e-commerce trend, says Robert Engelmayer, business area manager for Austria-based Knapp Logistics Automation Inc. Knapp’s order storage and retrieval shuttle technology (OSR Shuttle) allows efficient picking of small orders. Another challenge is to develop economic solutions to combine large order and small order picking within the same warehouse. Different e-commerce models have to be considered, such as “click and collect,” drive-through and home delivery. Autostore picks and stores single items and small cases to make better use of available space and increases efficiency at integrated goods-toperson workstations. Swisslog

than 35,000 SKUs from more than 1,000 suppliers, has utilized Opex Corp.’s Perfect Pick system in its Hebron, Ky. distribution center and is including the system in its new DC in Moreno Valley, Calif. Troy Van Wormer, vice president of operations at iHerb.com, says the robotic picking and replenishment has significantly reduced the labor required in the picking side of the operation. The system allows an order to be filled within 15 to 30 minutes of being released to the warehouse compared to the three hours that was needed by the previous batch picking system, Van Wormer says. “The speed of the system is impressive,” says Van Wormer, who notes the warehouse was recently able to find an order five minutes after the customer canceled it. He says the Perfect Pick system has an impressive financial payback and is easy for employees to learn. Pepsi Bottling Ventures (PBV), the Garner, N.C.-based bottler, increased storage capacity by over 60 percent in its 54,000-square-foot building by installing Power Automation System’s PowerStor cart and lift-based warehouse automation technology. Floor stacking the 2,300-pound pallets in the warehouse accommodated up to 4,800 pallets. One of the detriments of floor stacking included pallet tumbles, which damaged product and created sticky spillage. Additionally, PBV tracked pallet locations manually which resulted in an occasional inability to

find particular pallets. The cart and lift-based system consists of seven modules, which are accessible by eight vertical lift devices, 27 cart sets and 14 turntables. PBV’s system was designed to allow lift truck drivers to input and deduct pallets into the system via a double-layer induction/deduction conveyor. Large screen monitors direct operator/drivers as to which cargo is scheduled to go into and come out of which module in the system. Today, 7,800 pallets can be quickly and easily stored and retrieved automatically to serve the company’s distribution network. SSI Schaefer’s Simpson says companies are using different technologies within a warehouse to manage inventory. In some cases, companies use manual picking for the fastest moving SKUs and a “goods to person” system for slower moving SKUs. The “goods to person” system can include automatic mini-load systems with single-, double- or multipledeep storage; or an automatic conveyor, carousel or shuttle. Shuttle system innovation continues to offer more options. Sean O’Farrell, market development director at Dematic Corp., the New Berlin, Wis.-based provider of automation solutions, says the second generation of his company’s Multishuttle is lighter, faster and more flexible. Intelligrated’s next generation of robotic mixed-load order fulfillment solutions include adjustable, end-of-arm tooling capable of

Automated picking and order fulfillment benefits at a glance:

• Improved worker productivity • Improved picking accuracy

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• Better space utilization • Better working conditions

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• Faster order delivery • Improved customer service

Amazon raises interest At the start of December, Amazon, the e-commerce giant, announced significant progress in its fulfillment centers. With the use of Kiva shuttle robots and robotic arms, Amazon said it was able to speed delivery times while reducing the cost of goods shipped. Amazon claimed the average amount of time it takes to grab an item from a shelf and stuff it in a box is now about 15 minutes per order, down from an hour and a half. Amazon says it now has more than 15,000 Kiva robots operating across its fulfillment centers in the U.S. While many supply chain observers are closely watching Amazon because of its strength in the growing e-commerce world, it remains to be seen how successful Amazon will be long-term. While the company has grown fast, its financial performance has led some to question its long-term outlook, especially in the f&b sector, which has been slow to embrace e-commerce. “Everyone (in the supply chain) is acutely aware of what Amazon is doing,” says Alex Stark, director of marketing at Kane Is Able, the Scranton, Pa.-based 3PL, referring specifiwww.foodlogistics.com

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cally to Amazon’s network of fulfillment centers, sortation centers and Kiva shuttle robots. “Their (Amazon’s) strategy and execution will place enormous pressure on the industry to keep innovating,” Stark says. Swisslog, the Switzerland-based automation solutions provider, has introduced a robotic shuttle in Europe and the Far East called CarryPick. The key benefits of this system are labor savings, improved safety and potential for lower workers’ compensation costs, says Randy Jennings, director of food and beverage sales. Another CarryPick benefit is that it can be deployed in an existing facility as well as a greenfield site. “You can put it into existing facilities,” Jennings says. One consideration, he notes, is that the CarryPick does not make great use of cubic space, which is an objective for some warehouse decision makers. “It eats up a lot of real estate,” he says. Like the Swisslog Autostore solution, the CarryPick makes sense for e-commerce operations where there are a smaller number of line items per order and a high volume of orders. “We’ve had good success getting more penetration in North America,” Jennings says. He says eight projects have begun in the last three months, including food and beverage facilities.

Temperature-controlled benefits The case for automation is especially strong in temperature-controlled warehouses where operating costs are higher. Swisslog’s Jennings says cold storage facilities are more interested in automation, especially in light of the current truck driver shortage. “You’re going to see more dependence on rail transportation expanding for food,” Jennings says. “We’re seeing more and more opportunity for people to do automation in those facilities. We’re getting a lot more inquiries from people in that area.” In Las Vegas, Nev., Ritt Corp. is in the process of building a multi-temperature, automated storage and retrieval facility containing 150,000 pallet positions and a climatized cross dock of 150 truck bays connected with five enclosed sidings, according to the company. The company notes its technologies save shippers 63 percent of transportation and storage compared to road shipment and non-automated facilities. Ritt Corp’s modified atmospheric, reduced oxygen inhibits fire from ignition. The reduced oxygen, in conjunction with temperature, relative humidity, ozone generation and miscellaneous gasses controls and abates deterioration caused by age. This extends the shelf life of fresh food.

Because multi-deep, dense storage systems allow a warehouse to store more inventory in less space, these systems are cost efficient because they minimize heat loss, says John Clark, marketing manager at viastore systems, the Grand Rapids, Mich.-based storage solutions provider. Retrotech’s pick tray system (PTS), a shuttle-based system for cases/trays originally released in 2007, has been fully engineered for both ambient environments and harsh environments of the freezer warehouse. The newly-designed capability of the freezer-grade PTS provides a logistics automation solution to meet the growing demand for order fulfillment at the case and less-than case quantities from the frozen goods DC. The design brings the benefits of the robotic storage retrieval systems (productivity, flexibility and redundancy) for small-volume picking to the cold/ frozen DC, the company notes. Ventev Wireless Infrastructure, a unit of TESSCO Technologies Inc. has introduced an access point enclosure that can ensure Wi-Fi/WLAN connectivity in freezer rooms, where sensitive, indoor wireless access points must be protected from cold, condensation, and frost. Thick walls and heavy insulation make wiring for AC power expensive and

Are we obsessed with control? Guilty as charged. We believe inspiration drives automation, and that means helping our clients optimize operations with robust WCS or WMS software controls. What do we control? • All operations within the facility • Any OEM’s automated equipment • Order management and fulfillment • Inventory and traceability Why Retrotech’s WCS/WMS Software? • Over 25,000 software users worldwide • Experience with all major OEMs • LIVE environment implementations—zero downtime • Over 500 system modernization projects To learn more about Warehouse Control Systems (WCS) or Warehouse Management Systems (WMS), please contact us at 866.915.ASRS (2777).

www.foodlogistics.com

FOOD LOGISTICS

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time-consuming. A single Power over Ethernet cable powers both the access point and the heater. Since no AC is needed, installation is easier and less expensive. The WeightRight scale from Procat Distribution Technologies, based in West Berlin, N.J., produces bar code labels and uses the GS1 data standards. The system integrates a scale with a tabletop, touch-screen computer and label printer. It can be used as part of the picking or receiving process. The operator places the item to be labeled

on the scale. The weight displays on the screen and the operator prints a GS1 label for the item. It can also capture a lot number, customer number or date and embed the information on the bar code label.

3PLs are on board with automation Material handling providers say all shareholders in the supply chain, including 3PLs, are investing in warehouse automation. Most solution providers give 3PLs high marks for staying abreast of the technology even if

1/2 Island Bleed

they don’t deploy it in their own warehouses. 3PLs realize they need to manage warehouses equipped with automation. “It’s a considerable component of the requests that we’re engaged in,” says Cory Hypes, executive vice president at Power Automation Systems. “They (3PLs) are very much engaged market participants,” says Eric Lamphier, senior director of product management at Manhattan Associates, the Atlanta, Ga.-based supply chain solutions provider. Many f&b DCs, meanwhile, continue to reap benefits of voice recognition software and pick-to-light systems. Atlantic Dominion Distributors, the Virginia Beach, Va.-based retail grocery distributor, gained labor savings using a Softeon WMS at its DC in Hope Mills, N.C. The WMS manages picking, put-to-store, put away, line loading, cycle counting, receiving and inventory control. After finding the system paid for itself in labor savings in one year at the main DC in Virginia Beach five years ago, the company recently installed the system in its second DC, says David Carter, operations manager. In addition to reducing about 13 full-time positions in the first DC, Carter says order accuracy and traceability have improved and inventory can be fully counted in six hours instead of two days. “This is a time when the future is most unknown,” surmises Witron’s Sherman. ◆

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ABB LTD., 41-84-48-458-45, new/abb.com ALVEY, 32 (0) 55-33-57-57, alvey.eu CASESTACK, 866-828-7120,ww2.casestack.com DEMATIC CORP., dematic.com, 440-526-2779 IFMC INC., 310-498-7991, tonyvercillo.com INTEGRATED LOGISTICS CORP., 330-264-0522, integrated-logistics.com INTELLIGRATED, 866-936-7300, intelligrated.com KANE IS ABLE, 888-356-5236, kaneisable.com KARDEX REMSTAR, 800-639-5805, kardexremstar.com KNAPP LOGISTICS AUTOMATION INC., 678-388-2880, knapp.com MANHATTAN ASSOCIATES, 877-596-9208, manh.com OPEX CORP., 800-673-9288, opex.com POWER AUTOMATION SYSTEMS, 209-249-1616, powerautomationsystems.com PROCAT DISTRIBUTION TECHNOLOGIES, 856-767-8500, www.procatdt.com PSI TECHNICS, 925-287-0904, psi-technics.com RETROTECH INC., 585-924-6333, retrotech.com SSI SCHAEFER, 800-876-6000, ssi-schaefer.us SWISSLOG, 41-62-837-9537, swisslog.com VENTEV WIRELESS INFRASTRUCTURE, 800-851-4965, terra-wave.com W&H SYSTEMS, 201-635-3493, whsystems.com VIASTORE SYSTEMS,616-977-3950, viastore.com www.foodlogistics.com

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F L E E T

M A N A G E R

The Fleet Manager’s 2015 Forecast Execs cite new distribution strategies, regs and driver turnover among the key issues. BY LARA L. SOWINSKI

Recently, Food Logistics asked industry executives to share their insight on what’s ahead for this year and what they’re seeing from their vantage point.

The challenges Todd Bernitt, director of global sourcing, foodservice, at Minneapolis, Minn.-based C.H. Robinson notes that one of the main challenges facing fleet managers is the increasing shift from national to regional distribution strategies. “Historically, successful truck fleet business models capitalized on long-haul moves with minimal stops in order to limit the effects of variable cost in the equation. Today, there is a heightened consumer demand for locallysourced product requiring fleet managers to take a different approach to their asset utilization strategies, including sourcing short-haul drivers in a tight capacity market and implementing more efficient modes, such as less-than-truckload (LTL) or other consolidated options. Many fleet managers are dealing with the realization that drivers have become a variable cost in a supply and demand market.”

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Photos: Isuzu

s the food and beverage industry moves further into 2015, a number of difficult transportation issues from prior years are keeping us company, including driver shortages, proliferating and costly regulations, and the never-ending pressure to keep operating costs in check. On the flip side of the coin, fleet managers are discovering innovative technologies and better strategies to more effectively respond to new and existing challenges alike.

Isuzu’s N-Series low cab forward product line includes two EPA-certified diesel engines and a gasoline engine alternative.

Not surprisingly, regulations rank high as a top concern, says Bernitt, particularly “impending changes in regulations around food safety from a supply chain standpoint.” He says that, “Fleet managers will likely need to make large investments in equipment, service and technology to meet the demands of these regulatory changes and avoid any indemnification or liability that could result from an oversight.” Consumer demands are another consideration, especially the demand for freshness, he adds. “Subsequently, supply chains become shorter to meet demand. In an industry where

• FOOD LOGISTICS

speed to market and product integrity are imperative, technology and traceability solutions will continue to be important for members of the food supply chain.” When it comes to drivers, not only are they in short supply, the turnover rate is exceedingly high, points out James Langley, vice president of business analytics at TMW Systems in Mayfield Heights, Ohio. “Driver turnover remains a challenge with over one-third of fleets reporting greater than 50 percent turnover, while only 19 percent achieve better than 25 percent. The aging driver population accentuates the chalwww.foodlogistics.com

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this business—Isuzu, Hino, Freightliner and Volvo—have partnered with Telogis to provide connected intelligence from the factory than can be ‘turned on’ in an instant and provide detailed information and diagnostics. Real-time alerts empower fleet managers to assess a vehicle’s problem, repair it and get it back on the road as soon as possible.”

The responses Isuzu’s Brian Tabel, director of marketing at Anaheim, Calif.-based Isuzu Commercial Truck of America, Inc., would likely agree that

the latest vehicle designs and capabilities offer multiple benefits to fleet managers. “We continue to see customers right sizing their trucks to have the correct truck for the route, and in some cases that means moving up in class or moving down in class.” For example, “The Isuzu N-Series diesel trucks come standard with an on-board health report, which an Isuzu dealer can review for fuel economy, braking, acceleration and a number of other important items that can lower the total cost of ownership.” Fortunately, there are financing options that

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lenge with 89 percent claiming the average age of their driving force is over 40 years old, and 11 percent are over 50 years old, on average.” Langley also observes that, “In 2014, dedicated/private fleet tractor costs per mile averaged $.11—a penny less than that of over-the-road trucking fleets. Overall, fleet ages appear to be trending downwards somewhat as organizations look to benefit more from warranties in a market of rising expenses. However, over 73 percent of organizations report visibility to fleet maintenance information is not comprehensive.” On a more positive note, “In the realm of fuel management, the majority of fleets are running between 6 and 7 miles per gallon, but almost 19 percent are now achieving over 7 miles per gallon in fuel economy. Contributors to the improvements are 81 percent of fleets leveraging idle reduction technologies and other fuel saving measures, while stories of leveraging analytics to alter new equipment specs and achieve 1 to 2 miles more per gallon are getting more attention,” says Langley. Raymond Zujus, business development for food and beverage at Aliso Viejo, Calif.-based Telogis, also mentions the impact of marketplace trends. “The explosion of new food and beverage products and innovative packaging is affecting the business in many areas. Most notably, more complex orders and heightened customer expectations around service quality and responsiveness are driving up delivery costs to record-high levels, while eroding productivity.” The result is that “companies are being challenged to find ways to meet—and exceed— these expectations and still maintain profitability,” says Zujus. “More often, they are turning to connected technology for answers. Connected solutions provide visibility to fleet performance and asset utilization, accountability to driver performance and driving habits, and real-time knowledge sharing between drivers, managers, sales, merchandisers and customers, enabling operators to see where the opportunities are and where to focus improvement efforts. Leveraging connected technology and intelligent location, there are unlimited opportunities to reduce miles, manage engine idling, route more efficiently, eliminate wasted time, reduce redundant tasks, and decrease accidents and related insurance costs.” Zujus also says more companies are beginning to explore different vehicle designs and applications as a way to gain flexibility and versatility in their fleets and still meet government guidelines and environmental standards. Admittedly, “These vehicles can be more expensive, as well as complex, and it is the wise fleet manager who understands that diligent monitoring and maintenance is the key to getting the most value from them,” he says. “Many of the manufacturers that provide vehicles to

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• JANUARY/FEBRUARY 2015

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Why A New FMCSA Rule Misses The Mark By Fred Fakkema

n Dec. 18, 2014 the Federal Motor Carrier Safety Administration (FMCSA) issued a final rule that is sure to greatly impact food and beverage fleet operations. This rule eliminates the requirement for drivers to submit a non-defective Driver Vehicle Inspection Report (DVIR). It affects all motor carriers currently subject to 49 CFR 396.11, both private and for-hire, with the exception of operators of passenger-carrying commercial motor vehicles. Before the new rule went into effect, safety regulations required drivers employed by motor carriers to prepare a written report at the completion of each day’s work, on each vehicle operated. The report listed any defects or deficiencies that could impact the safety of the vehicle’s operation or result in its breakdown. This report had to be submitted to the employing motor carrier so that repairs could be made. While drivers must still complete and file the DVIR at the end of each tour of duty, they’re no longer required to file it if there are no vehicle defects to report. The main issue to remember is pre- and post-trip inspections are still required. Drivers must still perform pre- and post-trip evaluations of equipment condition, and complete DVIRs, if any defects or deficiencies are discovered or reported. The rule change aims to eliminate unnecessary paperwork for the trucking industry. Unfortunately, the rule change didn’t quite hit the mark. And here’s why—imagine if one of your trucks has a defect that causes or results in an accident with significant property damage, injuries, or fatalities, or all of the above. In the likely ensuing litigation, attorneys would probably ask for all driver vehicle inspection reports. Let’s say they find reports of defective equipment. But what they don’t find are any pre- or post-trip DVIRs for the days, maybe even the weeks leading up to the crash. Their likely conclusion and argument to the jury: You and your drivers got complacent and didn’t conduct the required vehicle inspections in the days or weeks leading up to the accident. Otherwise, if they had, “The defects would have been found and this terrible tragedy could have been avoided.” They may even have one of your drivers take the stand and ask him or her, “Did you ALWAYS conduct your vehicle pre- and post-trip inspections? Remember, you’re under oath.” Now, instead of a lawsuit, let’s say that accident triggered an on-site audit by the FMCSA. In that hypothetical situation, it’s easy to see how inspection officers could also come to the same conclusion as the attorneys. Obviously, your company would have a difficult time convincing the jury or the inspection officers that your drivers DO conduct their inspections even though you have no evidence. While Seattle, Wash.-based Zonar eliminates unnecessary paperwork with its patented electronic vehicle inspection report (EVIR), it also provides fleets the evidence they need to prove to juries and to inspection officers that daily inspections were completed, as required, even when there were no defects to report. I have had companies tell me they want our telematics system because of this rule change. They want the evidence Zonar’s EVIR offers to prove their drivers conduct all routine inspections should they ever end up defending themselves in court or trying to convince inspection officers not to write them up. Meanwhile, if your fleet also operates trucks in Canada, keep in mind this new rule does not change reciprocity. Canada will still require your company to prove that your drivers have conducted their proper pre- and post-trip inspections. This means many carriers with trucks that travel in Canada must still require drivers to keep some form of documentation in order to prove the inspections have been done. ◆ Fred Fakkema is vice president of compliance at Zonar (www.zonarsystems.com).

make it easier to acquire new equipment. According to Brian Holland, president and CFO at Ft. Lauderdale, Fla.-based Fleet Advantage, “We are seeing a growing trend in the transportation industry as more fleet operators turn to leasing to lower their overall costs, free up capital for growth and expansion, and gain the flexibility to upgrade to newer, more fuel-efficient technology when it becomes cheaper to do so.” Of course, the ability to free up cash makes leasing very attractive to fleet managers, emphasizes Holland. “Leasing allows fleet operators to avoid tying up large amounts of capital in their rolling stock, and instead invest that money to grow other aspects of their business,” he says.

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Record keeping requirements are part of the job for motor carriers and drivers. Cloud-based solutions like Connect CMMS save time and enhance compliance. From a more strategic perspective, deeper collaboration is one way to address current challenges, says Jorge Salas, vice president of operations at Miami, Fla.-based Ryder Dedicated. “We continue to see more openness for collaboration, even between competitors, to drive supply chain efficiencies,” he says. “For example, Ryder continues to leverage indirect

• FOOD LOGISTICS

For more information: C.H. ROBINSON, 952-683-2800, www.chrobinson.com CONNECT CMMS, 877-340-2077, www.connectcmms.com FLEET ADVANTAGE, 954-615-4400, www.fleetadvantage.net ISUZU COMMERCIAL TRUCKS, 866-441-9638, www.isuzucv.com RYDER DEDICATED, 888-793-3702, www.ryder.com TELOGIS, 949-389-5500, www.telogis.com TMW SYSTEMS, 216-831-6606, www.tmwsystems.com ZONAR, 206-878-2459, www.zonarsystems.com

and direct competitors within both wholesale and retail grocery distribution. We have utilized this model successfully in our region to reduce costs (both to the distributor and end customer), increase flexibility/adaptability, and when possible, combine freight to reduce the carbon footprint of the goods.” Salas says adhering to lean principles remains highly effective, too. “The general costs and complexity associated with operating fleets and supply chains continue to increase. While fuel prices dropped for months, the cost of drivers, equipment and maintenance continued to rise. Furthermore, as an outsourced provider, we have to deliver our service at a price that allows the customer to remain competitive. And, our customers are always looking to us to bring creative ways to continue to drive efficiencies.” This is where lean supply chain execution comes into play, says Salas. “As a lean company, our focus is on helping our customers and partners understand where their costs lie and then presenting them with cost saving initiatives. We have engineers and on-site managers constantly exploring profitable backhauls, both internally and externally, for customers. For example, cube-per-load analysis is broken down to cost-per-delivery and even costper-case.” ◆ www.foodlogistics.com

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www.foodlogistics.com

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FOOD LOGISTICS

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3 P L / R E C A L L S

Don’t Rest On Quality Alone: Recalls Demand Preparing For The Unexpected Planning is essential to effective response, consumer safety and minimal business disruption. BY STEVE DOLLASE

ecalls. Just the mention of the word can send shivers down the spine of a supply chain manager. No one ever wants to have one, and you can’t blame anyone who doesn’t even want to think about it. You should. It’s surprising how many companies are confident that they will never have a product recall and have no contingency plans in place. To have that confidence is to ignore the simple truth that there are risk factors that are not completely within your control. Fortunately, recalls are not common. But, they do happen. When they do, the best response is a prepared one. Denial of potential problems is risky. But recognizing risk in your business and preparing contingencies is powerful and bears a direct impact on how well you respond and recover. Every consumergoods company should plan for these contingencies, particularly in the food industry, where the potential impact to consumer safety and brand equity has far-reaching implications. Many companies do take some measures to reduce recall risk, implementing strong quality controls and even positioning quality as a brand differentiator. But, more is required. Think about these external factors that led to highprofile recalls:

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• A plant in China that used paint with cadmium content on a product used by children to consume liquids. • Dog treats produced overseas that turn out to have ingredients toxic to dogs. Striving for best-practice quality, with safety baked in, isn’t the whole picture. There is more complexity to contend with, not the least of which are global manufacturing and supplier bases providing raw materials and ingredients for your products. You can impose and monitor quality standards with vendors and suppliers, but measures must be taken to plan for the defects that are outside of your direct control … those low-probability, high-impact events like product recalls.

‘That will never happen here’ Good recall preparedness isn’t being able to look at your quality controls and say, “That kind of thing will never happen here.” It’s knowing what you’ll do if it does. If your company has robust reverse logistics capabilities you shouldn’t make the mistake of thinking that those capabilities will suffice in a safety recall. And, don’t make the mistake of thinking your forward logistics program is

• FOOD LOGISTICS

recall-ready. Some large consumer-goods companies have tried this approach and learned it doesn’t work that way. Forward logistics don’t effectively reverse for returns management, and recalls are a different set of circumstances altogether. A reverse logistics program is a component of the response to a recall, but it is not by itself a solution to a recall. The process you have in place for everyday returns, seasonal product withdrawal, liquidation, etc., is designed for efficiency, economy and value recovery. It is a continuous process that runs relatively predictably and at scale. By comparison, recalls are much more issue- and event-specific. Each will be unique and may be driven by safety and regulatory requirements. It’s important to note here that resources and capabilities are not the same as process. Companies that are good at reverse logistics may have the general agility and capabilities that are necessary for effective recall execution, but recalls are issue-driven. The same process used in everyday returns management won’t completely meet the requirements of a recall. So recall preparedness warrants knowing how you’ll use those resources and capabilities when you need them in that context. Recalls often come with strictly defined requirements for product withdrawal. Product may have to be destroyed onsite; it may have to go to a designated facility to be destroyed; that disposition may be very market-, location- or audience-specific, subject to regulations at federal, state and even local levels. Take the example of a recall for health hazard or food contamination: there may be requirements for onsite destruction using specific protective equipment and clothing to minimize handling and avoid potential human exposure or crosscontamination within the supply chain. While recalled products that are already www.foodlogistics.com

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in the hands of consumers will come back to retailers through their returns flow, different rules may apply depending on the nature of the recall. The normal returns process often won’t be adequate. With food, regulatory reporting may require that those returns be accounted for, counted and documented in very specific ways. There are many variables that drive the response and means of conducting the recall.

Collaboration is key The three most important factors for recall preparedness are cross-functional advance planning and preparation, having the right expertise and capabilities, and collaboration. Collaboration is key. The kind of rapid-cycle coordination necessary for effective recall response will demand solid collaboration of planning across departments, vendors, retailers and potentially other trading partners, depending on the nature and scope of the recall. The key in planning is having an appropriate strategy built to complement your company’s product portfolio, and ensuring that the plan is tested. At the end of the day, the recall strategy has to be something people can execute. They have to understand the strategy and process, have the resources and capabilities to execute it, and they have to know how to execute it efficiently and effectively. Testing those elements through a mock recall is the only way to verify your orga-

nization’s preparedness. to identify issues, see threats to success and Recalls are extremely complex, high risk and plan contingencies. fast moving. You’re better off planning ahead and enacting a proven plan than you are trying Don’t mock the mock recall to simultaneously build and execute a strategy. Mock recalls force you to evaluate your Consider that you may have to divert resources resources, possible regulatory contingencies, from everyday business processes to address a capabilities to meet them and your ability to do recall. Therefore it’s important to see recall planit all with minimal impact to customers, trading ning as a component of your company’s other partners and your bottom line. business continuity plans. A recall is a potential A good mock recall has to be more than just business disruption that warrants minimizing a traceability exercise and checking to make sure potential cost impacts and revenue implications. you have the resources in place in case you need For example, no one doubts that removing them. You won’t know how well those resources product from shelves is a business disruption. fit the bill until you test them, see how they perBut, if you plan ahead, you can identify ways to form and adjust to accommodate the insufficienhave replacement product back on shelves cies you will undoubtedly uncover. as quickly as possible to minimize lack of Having faith in your availability. That goes a long way toward quality controls is one Inmar’s more effectively minimizing the negative thing, but being preTop 10 Recall impact on revenue and can be an imporpared is another Best Practices tant element in managing consumer confithing entirely. http://bit.ly/1C0RIKy dence in your brand. There’s an old Collaboration among the many stakesailors’ proverb that holders is essential to success. But you won’t serves as a good reminder pull it off just by having a strategy on paper. to be pragmatic about such You can only be sure by testing the process. things: Pray toward heaven, but Inmar almost always recommends row toward shore. staging a mock recall. It’s really the only Feel free to download Inmar’s Top way to know your strategy is good and 10 Recall Best Practices. ◆ your people are capable of executing Steve Dollase is the president at according to plan. It’s often the only viable way Inmar Supply Chain Network.

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Session topics include: • Recalls • Regulatory • Supply chain collaboration • Industry trends and benchmarking • Reverse logistics

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• April 7 - 9, 35 WINSTON-SALEM, NORTH CAROLINA 2015 • FOOD LOGISTICS

JANUARY/FEBRUARY 2015

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SECTOR REPORTS

WARE HOUS ING: LIF T TRUCK

Want A Safer Warehouse?

Start With Forklift Users Using data to manage a fleet of lift trucks pinpoints the safety issues, but keeping the operator comfortable means keeping everyone safe.

by Eric Sacharski

• With modern day warehouses expanding up instead of out, today’s newest lift trucks are designed to lift heavier loads to higher rack positions.

hen it comes to lift trucks and safety, it’s all about the operator. The statistics alone tell the story. There are an estimated 6 million lift trucks/forklifts currently in use worldwide, about 856,000 just in the U.S., and according to the U.S. Occupational Safety and Health Administration (OSHA), there are 100,000 accidents reported every year resulting in 94,750 injuries and 85 fatalities. Overall, one in every six workplace fatalities are related to forklifts. When you factor in the statistics from the National Safety Council that state that 70 percent of those 100,000 forklift and industrial accidents per year are operator-induced, it becomes clear rather quickly that safety begins and ends with the operator. When you see a very rough estimate of $135 million of immediate costs associated with forklift accidents, and that’s not even considering insurance, OSHA fines and loss of inventory, those kind of huge costs make operator safety crucial to every warehouse that relies heavily on lift trucks for daily operations. Since lift trucks are the lifeblood of material handling operations, and with the timely flow of goods so important to profit margins, it’s easy to understand why keeping workers and operators happy and comfortable means keeping the facility safe. A recent study conducted for Toyota Industrial Equipment illustrates the fact that operator comfort is starting to drive forklift purchases. When asked what is the most important safety feature influencing their decision, almost as many purchasers said operator comfort (95 percent) as they did stability (96 percent) and weight distribution and balance (97 percent).

Image courtesy of Crown Equipment.

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• FOOD LOGISTICS

www.foodlogistics.com

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he Industrial Truck Association (ITA) estimates that there are nearly 856,000 forklifts currently in operation in the U.S., with other industry associations estimating a worldwide total of over 6 million. The U.S. Occupational Safety and Health Administration (OSHA) records about 100,000 lift truck accidents per year, with a surprising total of 85 fatalities annually. Out of those 85 deaths, 42 percent occur when the driver of the forklift tries to jump off a tipping vehicle in a crash. So it’s a simple proposition … eliminating lift truck and forklift tip-overs in the warehouse is a major focus for manufacturers and warehouse managers. Not only can mistakes on a lift truck be deadly, they are costly as well. The damage to inventory when a tip-over occurs often results in the cost to replace the lost inventory exceeding the salvage value of the damaged goods. In the case of food and beverage producers and wholesalers where single percentage profit margins are common, it can have devastating effects. One of the ways used to reduce tip-overs in lift trucks and forklifts is through the use of sensor technology integrated into several critical points on a vehicle. The use of sensors allows constant monitoring of a forklift’s operation, such as speed, turns and forward and reverse travel. This will detect conditions that might lead to instability and an increased risk of a tip-over. The data is collected on an on-vehicle unit and analysis is done in real time in order to automatically activate a corresponding correction to assist the operator in regaining control. The resulting actions can range from restricting the tilt angle of the mast, limiting the top speed when loaded, or preventing the lifting of the fork height at certain speeds altogether. While some of these systems aren’t necessarily new technologies, the progression in sensor technology is making rapid improvement in providing integrated stability control performance more smooth. These systems are typically offered as an addon option on newer vehicles by the lift truck OEM or dealer. They are starting to gain in popularity, according to SICK AG, a sensor intelligence company based in Germany. Here’s a look at the most popular stability control applications on a forklift, according to SICK: • Fork Height: Sensors are used to set maximum height thresholds for load pickup or placement at elevated heights, such as on today’s racking systems that are going higher as available space in the warehouse gets smaller. These systems not only prevent tip-overs by restricting the height loads, but the sensors also reduce the risk of damage to pallets when picking because of the inherent accuracy of the pre-determined fork height. A sensor attached to the highest pallet spot on a rack is reflected back to the sensor mounted on the mast. Through laser triangulation, it stops

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the fork height within one millimeter of the maximum height allowed for safe handling. • Travel Speed: Tip-overs often happen when the lift truck is traveling too fast with a load and turning sharply, or if the load is at an improper height or tilt. Using a closed-loop feedback sensing system, the sensor determines if the vehicle’s speed exceeds a safe threshold and automatically imposes acceleration limits to prevent a tip-over. • Steering Angle: Using a similar closedloop incremental encoder and sensor system with speed control, safe steering angles can be verified based on the number of turns of the steering wheel. A sensor near the steering shaft can relay unsafe steering angles instantly to the control system and restrict the operator’s ability to steer the forklift into “unsafe” situations. • Mast Tilt Angle: Sensors can determine if the mast is tilted past a safe range for optimum load stability in two ways. This is done either by determining the distance a mast travels away from a set point (or sensor) or an inductive sensor which actually detects the proximity of metal objects without touching them. The inductive sensor detects when the metal mast is within range when its electromagnetic field has been interrupted. Should the mast pass outside of the detection range, the information is relayed to the forklift’s control system in order to trigger the corresponding stabilizing action. • Load Presence: Two types of sensors mounted near the base of the forks or on the mast can help detect loads when they are out of view. Using a photoelectric sensor, the absence or presence of a load is detected when a beam of light is reflected off the load (or pallet) back to the receiver. An ultrasonic sensor generates a high-frequency sound wave off the load and back to the sensor, alerting the driver it can safely be loaded onto the forks. • Load Weight: By measuring the amount of hydraulic pressure exerted by a load on the vehicle’s forks, pressure sensors can offer a primary or secondary verification of the weight of the load by an on-board forklift scale. The data is transmitted by the sensor to the control system, which can automatically trigger stabilizing actions needed for heavier loads. • Location Sensors: Forklift tip-overs also occur when a vehicle comes in contact with overhead obstacles, beams, fire-protection sprinkler heads or even doorways. To restrict access or trigger speed or mast height limitations in certain areas of the facility, RFID tags are placed on walls and other areas of the warehouse so that when a sensor on the forklift detects a tag, it can implement the appropriate stability measures. Source: Reduce Accidents on Manned Forklifts With Integrated Stability Control, SICK AG, 800-325-7425 or www.sick.com.

• FOOD LOGISTICS

‘Big Data’ as a useful safety tool Perhaps the largest trend not only in the lift truck industry, but in the global f&b supply chain as a whole, has been the expansion of software and technology applications. Facility managers can be overwhelmed by the amount of information they can glean after just a few weeks of using some of the newer fleet management software applications offered today. But when they see the impact this “big data” has on safety, it often proves to be well worth the investment. Fleet management software offers insights into operator data as basic as which operator is on which forklift, to advanced safety features like not allowing certain operators to use certain vehicles where they haven’t passed the required safety training. They also offer real-time and actionable fleet data on vehicle impacts and crashes, as well as lots of productivity and uptime data that can get as advanced as the customer desires.

Image courtesy of Hyster.

Sensor Technology Offers Integrated Stability Control To Eliminate Tip-Overs

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“Managers now have real data gathered by the forklift, instead of relying on operatorreported impacts, and it’s providing a holistic picture of how the equipment is being used and where and what safety incidents are really taking place,” says Andy Smith, director of product management at Crown Equipment. Masters Gallery Foods, a supplier of cheese products headquartered in Plymouth, Wis., made it a priority to improve lift truck safety when they increased from 12 to 19 trucks and 40,000 to 110,000 square feet of warehouse space during an expansion project started in 2012. Since Masters Gallery Foods already had a fleet of Raymond Corp. lift trucks, they chose to install Raymond’s iWarehouse fleet optimization software. Within the first month, the results in safety, productivity and maintenance made a significant difference inside their expanded main warehouse. “In our first month of using the system, we experienced a total of 45 alerts (impact www.foodlogistics.com

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alerts),” says Dan Murphy, warehouse manager at Masters Gallery Foods. “We provided additional training for the operators involved, and five months later we reduced the number of alerts to five – a reduction of 88 percent. The system plays an integral role. It encourages proper lift truck operation, reduces damage, maintenance, downtime and costs.” Clemens Food Group, a pork producer based in Hatfield, Pa., received similar results when they Image courtesy of Crown Equipment. installed Crown’s fleet software system called InfoLink, with an 80 percent tribution and warehousing at Clemens in a reduction in impacts across three of their case study provided by Crown. facilities totaling over 1.3 million square feet. With about 230 forklifts from many different Have a seat and get comfy manufacturers and 1,080 operators, Clemens Since keeping the operator comfortable for originally installed the system to mine for an entire 8- or 10-hour work shift is becohidden cost-cutting opportunities. Within meing more closely connected to safety, it’s five months, the system uncovered significant likewise become more of a focus in lift truck improvements related to OSHA compliance, design and innovation. Simple ergonomic operator certification management, impact designs like added suspension in floorboards, detection and operator performance. The sysadjustable and contoured armrests, kneetem has “completely elevated and enhanced pads and backrests, lower operator steps and the safety culture of our facilities,” according adjustable user controls have long been added to Kevin Shayer, the general manager of disto lift truck designs to increase productiv-

• A warehouse worker uses Crown’s QuickPick Remote to move the lift truck ahead in the aisle, eliminating the need to step up and down off the truck to move to the next pick position.

ity and safety. These features reduce fatigue and the amount of repetitive motions. But more and more manufacturers have noticed a growing interest in one of the most basic and simple functions on a lift truck...the seat. Since a majority of loads in a warehouse are carried while the lift truck is in reverse for optimal visibility, seats that can swivel or that can be adjusted to multiple angles for different sized operators have become standard. This has been done to accommodate drivers who spend many hours each day in twisted positions. Mitsubishi Caterpillar Forklift America (MCFA) recently launched a new series of Jungheinrich moving mast trucks to meet the demand for lift trucks with seats, as their new ETV 110/112 Series is one of the few sit-down moving mast trucks that have been

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Image courtesy of Yale Materials Handling Corporation.

Image courtesy of Jungheinrich.

operation as smooth as possible to increase operator comfort. The power steering has become so advanced in many of today’s newest lift trucks that “they’re getting so easy to drive it’s like driving your car for an entire shift,” according to Rogers. Unicarriers Americas has also seen an increase in interest in sit-down and center-rider lift truck models, especially since those models are designed to be more accommodating and • An operator sits comfortably in a customizable to fit unique operator sizes. Jungheinrich ETV Series 1 lift truck. “We’ve had a greater interest in our center riders popular in Europe but are just starting to because of the smoother ride gain popularity in North America. and the increased suspension “The overall industry trend is loads are in the floorboard,” says Mark getting heavier, yet they want to maintain Porwit, director of marketing their skinny aisles, so they have to lift the and product management at bigger loads higher too,” says Steve RogUnicarriers Americas. “The ers, senior product marketing consultant at step off height is the same on MCFA. “The moving mast reach truck works center riders. We’re continudifferently, but when operators demo the ing to see more female pickers truck, they think it’s phenomenal that they in our customers’ operano longer have to stand in the truck for eight tions, which means not only hours a day.” customizable features due to Most new lift trucks also feature all of the physical size differences, but smoother manergonomic comforts of new automobiles, ual features that reduce the effort required to including automotive-style driving pedals, operate the forklift.” hydraulic control levers and either power How do you take the idea of operator or hydrostatic steering to make the overall fatigue one step further? Don’t even make them get up and down and in and out of a seat at all. “We’ve talked with our food and beverage customers, and the walking isn’t just what SHIPPING SUPPLY SPECIALISTS fatigues operators during order picking, but the continuous stepOVER 30,000 ITEMS AT YOUR FINGERTIPS ping off and on the truck,” says Smith. So Crown introduced its QuickPick Remote system for low-level order picking that allows operators to advance the truck with the push of a wireless remote button to reduce the need to step onto the truck to advance it to the next pick location.

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• FOOD LOGISTICS

Aside from the idea of keeping operators safe by letting them

sit down or stand more comfortably, many of today’s technological advances in lift trucks are driven by the working environment in narrow aisle warehouses that are adding racking upwards to economize space. “Food and beverage are looking for a safe way to pick from second levels because they are trying to put more SKU numbers in smaller spaces, so they are going up versus out with their products,” says Smith. This smaller-and-narrower trend plays right into the sweet spot for Landoll Corp., makers of the Bendi and Drexel narrow aisle forklifts headquartered in Topeka, Kan. Landoll will be showcasing a brand new high lift model at this year’s ProMat 2015 that works in an aisle as narrow as • Yale offers an impact monitor option 78 inches and can on models that can lift as high as 480 sense the lift truck’s inches (40 feet). movement. To handle these smaller spaces, not only are the truck designs slim and compact, but now the mast is getting smaller for better visibility. Most manufacturers have improved the visibility either by narrower design, by offsetting the mast away from the center of the operator, or even using design features like Crown’s MonoLift mast. This mast actually gets narrower the higher it goes. Yale Materials Handling Corp. took its Hi Vis mast design on new lift truck models one step further for safety by offering mast cylinder safety fuses to “prevent a raised mast from free-falling down in the event of a hoist hose rupture,” according to Jay Costello, director of training. As a result of warehouse racking going up and not out, one of the newest featured designs on lift trucks is increased maximum lift heights and higher capacities. The latest models to leave the manufacturer are equipped to reach heights of 23.5 feet and higher. And heavy loads at elevated heights can bring obvious safety issues, which is why the use of sensor technology to safely navigate at the upper levels of the racking is starting to become less of a customized feature and more of a necessary safety requirement for operators and facility managers alike (see sidebar on page 38). “When you get up high, operators can quickly lose perspective of where the forks www.foodlogistics.com

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Are Hydrogen Fuel Cells A ‘Safer’ Alternative?

ne of the recent trends in lift trucks and material handling in general is the emergence of the hydrogen fuel cell (HFC). In the case of lift trucks, HFCs are being touted as a safer alternative for power in a lift truck or forklift than the current widespread use of lead-acid batteries. But that brings up an interesting question … is the adaption of hydrogen fuels cells in lift trucks a safety feature? Will the safety of the entire fleet of lift trucks improve with a conversion to hydrogen fuel cell technology? The answer depends on who you talk to, with the outlook toward fuel cell technology in general ranging from highly skeptical to positive, with a healthy dose of “wait and see.” “We’re not seeing much interest (in HFCs) from our customers; it’s sort of stalled in my point of view,” says Jim Chesla, vice president of business products at Starke ForkLift based in Canada. “In a lot of lift trucks,

the battery is used for stability and balance, so replacing that with a single HFC, it causes stability and balance issues,” says Steve Rogers, senior product marketing consultant at Mitsubishi Caterpillar Forklift America (MCFA). “To make up for that weight requires a lot of redesign and it becomes a very specialized lift truck.” Since the only byproduct of a hydrogen fuel cell is heat and water, proponents of the fuel cell movement like Plug Power Inc., the Latham, N.Y.-based producer of hydrogen fuel cell technologies, have always touted the environmental benefits of the fuel cell over the lead-acid battery. But since you can’t just drop a fuel cell into any old lift truck, lift truck manufacturers have yet to fully embrace fuel cell technology. That changed in December of 2014 when NACCO Materials Handling Group (NMHG), the parent company of Hyster Co. and Yale Materials Handling Corp., upped the ante on the hydrogen fuel cell trend by acquiring Nuvera Fuel Cells, Inc. The addition of Nuvera makes NMHG the first lift truck OEM to offer on-site hydrogen generation and refueling capabilities, addressing the type of hydrogen “infrastructure” issues that crop up time and

• Infrastructure and costs related to refueling have slowed the pace of hyrdrogen fuel cell expansion. Image courtesy of www.nuvera.com

are at, so it’s difficult to stop them at the right (rack) position,” says Ed Campbell, sales manager at Landoll Corp. “Our new high lift model will be equipped with a shelf-level selector that uses a camera and a shelf sensor, so the operator can just program in what level they want the forks to go to and they automatically stop at the right position.” With more lift trucks in tighter areas, the market for presence warning devices like blue lights, self-adjusting back-up alarms, and flashing and strobe lights have almost become must-have add-ons on any truck in the fleet. “Instead of 10 beeping horns in a facility, you install a blue light on the overhead guard and it shoots out a stream of laser-like, blue light that alerts workers on the floor and on mezzanines to the presence of a forklift,” says Jim Chesla, vice president of business products at Starke ForkLift. “That’s one of the biggest after-market safety products in the forklift industry today.” ◆

time again as the main stumbling block to full-scale fuel cell technology adaption by lift truck manufacturers and warehouse owners. “With fuel cells, there are still a number of ROI considerations that have yet to be fully resolved with the technology,” says Andy Smith, director of marketing product management at Crown Equipment. “The complexity of the technology, reliability issues in performance, the total cost of ownership and the absence of refueling infrastructure continue to limit widespread adaption.” For the record, NMHG is realistic that its acquisition and entry into the HFC sector will reap profits and market share. Plug Power is still struggling to be profitable, and leaders at NMHG acknowledge the addition of Nuvera will cause “significant operating losses” while it works to commercialize the HFC technology to achieve a break-even bottom line. Then there’s this finishing note, courtesy of Mark Porwit, director of marketing and product management at Unicarriers Americas ... what about the next best technological trend for lift trucks? “It’s not out of the question that HFCs could be leapfrogged by another technology altogether,” speculates Porwit.◆

For more information: CROWN EQUIPMENT CORP., 419-629-2311, www.crown.com LANDOLL CORP.,, 800-428-5655, www.landoll.com/mhp MITSUBISHI CATERPILLAR FORKLIFT AMERICA (MCFA), 713-365-1000, www.mcfa.com PLUG POWER, INC., 518-782-7700, www.plugpower.com RAYMOND CORP., 800-235-7200, www.raymondcorp.com SICK AG, 800-325-7425, www.sick.com STARKE MATERIAL HANDLING GROUP, 877-435-4352, www.starkecanada.com TOYOTA INDUSTRIAL EQUIPMENT, 800-226-0009, www.toyotaforklift.com UNICARRIERS AMERICAS CORP., 800-971-5438, www.unicarriersamericas.com YALE MATERIALS HANDLING CORP./NACCO MATERIALS HANDLING GROUP (NMHG), 440-449-9600, www.yale.com

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HighJump Advanced internal and external sources to produce Fulfillment Application insights that can reduce costs while improv-

ing service quality, the MHI report notes. These tools have become more important as HIGHJUMP ADVANCED FULFILLMENT companies needIStoAfulfill orders from mulAPPLICATION POWERFUL SOFTWARE tiple customer types. SOLUTION THAT PROVIDES A FAST METHOD OF“You CONSOLIDATING SHIPMENTS have these different channels INTO of TRUCKLOADS AND OR WAVES. orders coming in; different service requirements,” says Shyam Kirshna, executive vice president at Softeon, the Reston, Va.-based software provider. Retail and wholesale Cost Reduction Through Optimized Order Fulfillment customers, and even individual consumers Customers today continually demand faster order-fulfillment times. Meeting tight deadlines while maintaining (through web stores), have different order fulprofitability requires you to streamline your warehouse processes while simultaneously reducing costs. fillment preferences and constraints. “What are the best transportation strategies; In this demanding environment, it is crucial for you to maintain a highly efficient shipping operationshould while providing the value-added services customers now expect. Can you master the challenge truckload and I use UPS or LTL? ofOroptimizing how should I useplanning my wave picking while keeping shipping costs under control? The answer is “Yes”—if you have the HighJump™ Advanced own fleet more optimally? How do I decide Fulfillment Application. what’s the best DC to drop an order?” Krishna Your asks rhetorically. “You improve customer Advanced Fulfillment Application—Optimize Fulfillment Operations service based on these order fulfillment prefHighJump Advanced Fulfillment Application is a powerful software solution that provides a fast method of consolidating erences or DC rules that you define through shipments into truckloads and or waves. Integrating seamlessly with HighJump Software’s warehouse management the distributed management solution.” solution, HighJump Advanced Fulfillment Application features a web-based order user interface which allows the user to run different profiles to select the desired orders or line items. The solution, he says, is not only to effectively address multi-channel fulfillment, but Increase Productivity and Reduce Paperwork also provide real-time visibility across the With HighJump Advanced Fulfillment Application, planners are DC freedlandscape. from the time-consuming, paper-based entire administrative tasks involved in manual truckload or wave building. Planning decision-making thatthat used to take • Lima, Peru-based Supermercados “We have new and automated data flows hours now take minutes. In addition, warehouse pickers are more productive and efficient on the job, which translates Peruanos uses Logfire’s WMS to gain allowfacility us to throughput. make sure we always have realinto streamlined workflow on the warehouse floor and greater more control over its supply chain and time business analytics and full control, so improve inventory replenishment at its Mistakes Improve Efficiency and Avoid Costly customers can change direction fast–in the supermarkets and hypermarkets. face access of consumer demand,” Sanker, HighJump Advanced Fulfillment Application provides you with to a variety of viewssays that Dan empower you to meet your company’s unique business requirements in the mostpresident demandingand multi-user planners can CEO ofenvironments. CaseStack Several Inc., the build different truckloads simultaneously, with each handling different geographic regions or product lines for 1) Controlling cost-to-serve; 2) Optimizing North Fayetteville, Ark.-based 3PL. maximum efficiency and accuracy. the distribution network footprint; and 3) Integrating technology solutions and systems Multi-channel fulfillment raises costs across functions and channels. Order fulfillment is especially critical in The MHI report identifies two major straa multi-channel setting compared to a trategic priorities for the supply chain: supply ditional brick and mortar setting because it chain analytics and multi-channel fulfillment. represents significantly higher costs: up to These two priorities are closely interrelated. 20 percent of online-order revenue, which is Analytic tools harness data from both about four times the proportion for traditional

• FOOD LOGISTICS

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• HighJump Software’s advanced fulfillment application can provide the ability to dynamically schedule deliveries and manage delivery to the customer with back-end tracking and reporting.

Photo: Supermercados Peruanos

ith technology offering new ways to make warehouse operations more efficient, the warehouse can become a competitive advantage for a company that manages food and beverage inventory. While automation offers advantages in the areas of dock management, put-away, sortation, picking and tracking, deploying such tools requires a warehouse control system (WCS). In order to synchronize the automated functions with other warehouse tasks, many companies also find it necessary to have a warehouse management system (WMS), which can be viewed as the “brains” of the warehouse. While this article focuses on warehouse management, software providers encourage users to take a comprehensive view of business management software. Just as WCS and WMS have evolved over time, so have transportation management systems (TMSs) and demand planning and fulfillment applications. Each solution has the ability to react and respond to supply chain disruptions as they occur. But each also traditionally operates within a “silo” and does not take into account the constraints across the different application areas. As warehouse managers consider management systems for these different “silos,” they will find it easier to manage the different functions if they can easily interface with each other. According to Material Handling Institute (MHI) 2014 Industry Report, material handling executives’ top three challenges are:

Photo: Highjump Software

Datasheet

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channels, according to Chuck Fuerst, director of product strategy at HighJump Software. An adaptable WMS can provide all the tools needed to set up an in-store fulfillment operation, including order capture, store mapping, work queue management, wave planning and real-time inventory tracking. Fuerst says it can enforce the exact supply chain execution capabilities that are required to meet customer demand. A retailer, wholesaler or manufacturer can create new offerings and work flows to provide value-added services to their respective customers, Fuerst says. These services include greater inventory visibility; the flexibility to dynamically schedule deliveries and select shipment methods; manage delivery directly to the customer along with back-end tracking and reporting; and seamless management of online orders and returns alongside existing retail channels. Manhattan Associates, based in Atlanta, Ga., has rolled out a system specifically designed to help retailers identify the most profitable order fulfillment option. It’s called Available to Commerce, and gives retailers the ability to offer specific units of inventory available for sale in the most appropriate channel (online, store, same-day delivery, etc.) and then optimize how the order is fulfilled, based on strategic planning and daily operational variables. “There are many factors to consider in constructing the perfect omni-channel order: when you sell it, where you sell and to whom you sell it,” says Brian Kinsella, Manhattan Associates’ vice president of order management. “The ability to match inventory to demand without bleeding one channel to feed another is an essential element in today’s retail environment.” “Available to Commerce offers a gamechanging capability for retailers as they can now differentiate between simple inventory visibility and a more thoughtful view of inventory availability,” says Kinsella. “Through our order management application, retailers can gain a comprehensive view of their inventory across channels, determine how much of it should be offered across various delivery methods and channels, and identify the best path to profitable fulfillment,” he says.

are being picked, enabling more orders to be picked during a pick cycle. Instead, the WMS creates order waves to see how much labor and how much time it will take to complete each wave. This is known as “wave” picking. As the wave works its way through the DC, the WMS allocates how many downstream operators will be needed to pack orders once the picking process is completed. Once the items for the wave have been picked, they then have to be sorted into orders. The wave strategy makes sense when work-

ing with a large volume of uniform products, but it creates issues when orders for different SKUs are received simultaneously. “You can’t release the next wave until you reach a clear point,” says Dave Simpson, executive sales manager at SSI Schaefer, the Germany-based logistics provider. Hence, some WMS systems have introduced “waveless” algorithms that update the order management system every time an order is assembled. Simpson notes that the “waveless” strategy can apply to either a goodsto-person or person-to-goods picking system.

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Wave versus wave-less order fulfillment Multi-channel order fulfillment has caused some supply chain decision makers to take interest in “waveless” fulfillment strategies. Companies with large numbers of SKUs of uniform size and shape have traditionally not sorted down into individual orders when they www.foodlogistics.com

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• JANUARY/FEBRUARY 2015

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Photo: SSI Schaefer

mentation of SAP distribution center • A waveless picking strategy updates the order management system when an order is received. A user creates an order using SSI Schaefer’s WMS software.

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chain planning and more efficient product replenishment. “JDA intelligent fulfillment tance of interfacing WMS with order manageplatform integrates with the WMS, TMS, K New construction of a 5-aisle High-bay Warement software. “The (order) configurations supply chain planning and distributed order house for production supply and removal are being driven by the (order) event triggers,” management,” says Sahi Camacho, JDA SoftEricautomatic Lamphier, senior directorconveyors of product with ware’s customer executive for Latin America. Ksays16 shipping management at Manhattan “PacificStar chose this as the ideal solution to sequenced loadingAssociates. series Pacific Star, a Guadalajara, Mexico-based help strengthen and streamline their supply Kfood Implementation the production via runs over 6 million miles per distributor, recentlyof deployed a new set supply chain, which Kanban,software pickingsolutions parts provided and call-off parts of fulfillment by year and receives more than 11,000 orders its WMS provider, JDA Software, to estabmonth.” K Fully-automated goods receiving witheach routine lish a full view of inventory and ensure that Traditional forecasting systems generally test via QIE-integration with ERP the company’s clients receive products on do not account for execution level constraints KtimeApplication ofcondition. 10 different load carriers and in optimal The company in the warehouse or as part of the transportapreviously a customized fulfillment plan tion network or overall labor capacity, says in the used warehouse that utilized information from the ERP sysPrashant Bhatia, JDA Software’s vice president Ktem,Implementation of automatic and manual the WMS and Excel spreadsheets. of product marketing. By using intelligent picking positions The new intelligent fulfillment platform fulfillment, companies know true inventory enables Pacific Star to ensure more accurate availability across the supply chain, allowing inventory levels through improved supply them to profitably fulfill customer orders.

Project Objectives: Several software vendors note the impor-

Pittsburgh, Pa.-based Giant Eagle Inc., one of the largest food retailers and distributors in the U.S., has expanded its relationship with Manhattan Associates and will implement its TMS, distributed order management and store fulfillment solutions as part of its existing use of the Manhattan SCOPE platform. This new agreement is part of Giant Eagle’s technology strategy to simplify and consolidate its IT infrastructure, reducing the number of disparate supply chain vendors and systems from eight to one, according to a Giant Eagle spokesperson. Giant Eagle chose Manhattan Associates based on its successful implementation of the company’s WMS and the value of its supply chain commerce platform. The platform will now serve as the company’s single system for driving operational efficiencies and allowing easier implementation of new, complementary solutions, such as TMS. Allan Brothers, a Naches, Wash.-based fruit grower, packer and shipper, streamlined its functions and enhanced its tracing capability with the HighJump Supply Chain Advantage Suite. The software package unites fruit packing lines, shipping and receiving docks, a refrigerated DC for packed fruit storage, as well as regular and controlled-atmosphere

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Project Objectives: K Implementation of SAP es EWM Old Dominion simplifi global shipping by doing more than delivering freight. Our focus on premium service K Automated HBW with means 16,800every palletshipment arrives with one of the lowest claims ratios and one of the best on-time records in the industry. storing positions K 2 SRMs with 2 LHDs for eightfold deep storage Dominion Freight Dominionbottles logo, OD Household Services and Helping The World Keep Promises are service marks or registered service marks of KOld Throughput ofLine, upthetoOld 16,200 Old Dominion Freight Line, Inc. All other trademarks and service marks identified herein are the intellectual property of their respective owners. © 2015 Old Dominion Freight Line, Inc., Thomasville, N.C. All rights reserved. hour 44per JANUARY/FEBRUARY 2015 • FOOD LOGISTICS www.foodlogistics.com

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storage warehouses. Allan Brothers reports from Atlanta, Ga.-based LogFire improved on a store management system that sits on that programmer time for adding search fields inventory replenishment and customer the same platform as the WMS. Both systems to pages has been reduced with the new filter service, helping the company expand to 30 could be implemented as stand-along solutions. features. In addition, the company can now more stores in Peru in the last three years. The WMS will also support Supermercados handle more information faster, thanks to a Improved inventory visibility has been future plans to introduce grocery e-commerce. nearly 75 percent reduction in network bandhelpful replenishing inventory both within Dietz and Watson, the Philadelphia, width and the ability of the application server stores and between stores and companyPa.-based meat and cheese manufacturer/disand web server tributor, realized components to run back in 2006 on 64-bit versions of that its homeThe Materials Handling Institute notes the following convergence of forces is helping to expand the possibilities for Windows servers. grown WMS supply chain analytics: “We needed to was not doing a • Data proliferation. The amount of data available for analysis—especially supply chain data—is growing quickly. make some infragood job man• Cheaper data storage. From 2000 to 2008, storing an MB of data became 100 times less expensive. structure changes aging serialized • Faster processing power. Processing speed has increased 256 times since 2000. to keep up with data, says Mike • Anywhere, anytime connectivity. Mobile data is now available almost everywhere. our growth,” says Wiese, system • Better tools. Innovative tools make sophisticated analysis simpler and more cost effective. Autumn Bernier, administrator • Advanced visualization. New tools and techniques help show patterns in huge volumes of data. CIO and systems and technical manager, Allan program manBrothers. “The enhanced graphing capabiliowned DCs, Gonzalez de Boada says. ager. Different products had different code ties have given us greater visibility into our Deliveries to stores are now 97 to 99 percent dates and customers had different delivery inventory and customer trends.” accurate. Inventory visibility is especially expectations. Supermercados Peruanos, Peru’s second important as the company’s supply chain now Dietz and Watson also wanted more largest supermarket and hypermarket chain, covers larger distances; deliveries can take control over its distribution. The company gained more control over its supply chain close to three days for some stores. The latwas using as many as seven 3PLs, each of by deploying a WMS rather than relying on est development with LogFire is a workforce which required Dietz and Watson to adhere 3PLs for its distribution, notes Eduardo Gonmanagement system which will increase the to a separate set of data requirements. The zalez de Boada, supply chain director for the productivity in the DCs. company decided to centralize its distribution Lima-based company. The cloud-based WMS LogFire is also working with Supermercados operations in one DC. To gain more control

Supply Chain Analytics Moves Forward

• Personalized, single point of contact for status on all shipments • Paciﬁc Promise™: service from 24 Asian ports direct to the U.S. • Direct service to or from Canada, Mexico, Puerto Rico, Alaska and Hawaii

OD Global offers:

For more information, visit odfl.com or call 1-800-432-6335.

www.foodlogistics.com

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Photos: viastore systems

• viastore systems’ software for managing automated storage and retrieval systems allows pickers to pull orders in the warehouse as they are received. The viastore system can integrate both automated picking and manual picking in a warehouse.

over the order fulfillment and delivery functions, they invested in freezers and automatic conveyor and sortation systems in a new 300,000-square-foot facility. The company deployed a WCS for the conveyor and sortation systems, but to ensure they would optimize the benefits, they sent a request for proposal to 20 software providers for a new WMS. Westerville, Ohio-based Transtech Consulting evaluated the WMS proposals. They eventually selected the Softeon suite that includes order management, labor management, transportation and slotting. Dietz and Watson decided on a phased approach of implementing one product line at a time over a period of four months. Now, product is received from the manufacturing facilities in Philadelphia, Pa. Baltimore, Md. and Corfu, N.Y. Softeon developed an interface with the corporate operating system to achieve complete real-time order and inventory synchronization. In 2013, Dietz and Watson’s plans were temporarily scuttled by a fire that destroyed the DC in Delanco, N.J. Wiese says the company wasted no time designing a new facility with even more automation, including picking, sorting, labeling and robotic palletizing. Wiese says this would not have been possible if the company didn’t have confidence in the WMS system. “Direct pick-to-belt will speed up the process,” Wiese says.

Tracking units in shorter time intervals As order fulfillment becomes faster thanks to new technology, management software will have to also be capable of tracking individual products. Shippers need to be able to track products as government and trade organizations will have stricter product tracing requirements. Knapp Logistics Automation Inc. has already developed solutions capable of capturing package codes and tracing this information throughout the entire supply chain, says Robert Engelmayer, business area manager. Prism Logistics has deployed the AFS Technologies’ WMS platform with functionality and integration with GS1 standards to provide single-scan traceability, says Jere Van Puffelen, president of Stockton, Sacramento, Livermore and Hayward, Calif.-based Prism Logistics. Distributors can rely on a single WMS tool to gain better visibility into food traceability and automate data throughout the warehouse with a single scan. Prism Logistics has had the ability to scan UPC codes for years, but the AFS Technologies upgrade now allows customers to scan a GS1 label once, extract multiple data elements, including GTIN, lot and quantity. Prior to the GS1, lot codes typically had to be logged into the system manually. Van Puffelen says GS1 is especially important in light of the new food safety regulations. In the meantime, he expects more of his customers’ customers to be mandating scannable

WMS Tiers 1, 2 and 3; Cost and Functionality WMS TYPE

COST RANGE FUNCTIONALITY $20k-$150k

PC based, create work orders, print shipping labels, zone picking, inventory control

Tier 2

$150k-$500k

PC/mainframe, automated wave picking, cross docking, system-directed replenishment, load planning, real-time data, partial integration

Tier 1

$500k-$2.5M

Mainframe or web based, voice activated, RFID tagging, wireless communication, full integration with ERP

Tier 3

SOURCE: IFMC, Inc.,Yorba Linda, Calif.

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lot codes. “The whole chain of custody will become more of an issue; who has it when,” he says. The fact that the GS1 is an international standard makes it all the more attractive to companies in the supply chain.

WMS and WCS: Do you need both? WMS and WCS systems both continue to evolve. Some WCS providers argue that new WCS systems are capable of handling enough management functions and that a WMS, which is more expensive, is not necessary. A WCS controls automated equipment that can interface with a WMS. The WCS is the “middleware” between the WMS and the warehouse floor to manage all real-time communications, observes Richard Lanpheare, director of business development at Retrotech Inc., the Rochester, N.Y.-based system engineering and integration firm. The WCS can manage and control the material handling equipment, data collection systems, order planning and processing, and the pick, pack and ship processes. It is the single interface for a stable, flexible control of warehouse operations, Lanpheare says. The WCS can instruct a diverter on a conveyor to direct a case down a specific chute, or instruct voicedirected picking, or signal an automatic packaging system to place a label on a package traveling along a conveyor belt in an effort to streamline the process. Some WCS software can also perform put-away, inventory transactions, replenishment, order processing (based on WMS rules) and labor management. A labor management component in a WCS can provide a real-time view of operations as a dashboard, with the ability to identify performance problems, bottlenecks and other obstacles to productivity to give supervisors a view into their operations so they can take corrective action immediately. Power Automation Systems, the Lathrop, Calif.-based storage system provider, has added a WMS module to its WCS software that can manage outbound orders, says Cory Hypes, executive vice president. “We see it as a ‘mid-level WMS’ for food and beverage www.foodlogistics.com

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manufacturers,” he says. viastore systems, the Grand Rapids, Mich.-based international systems integrator, has upgraded its software solution for AS/RSs to include the ability to pick orders as they are received, says John Clark, marketing manager. “We do a waveless picking approach,” he says of the company’s software. “We’ve combined a warehouse control and warehouse management solution into a warehouse execution system that can talk to automation and can talk to conventional (picking) as well,” he says. Forte Industries, the Mason, Ohio-based software provider, has developed its Smart Warehouse Suite of Warehouse Execution Software (WES) designed to provide WMSlike capabilities in lieu of a full-fledged WMS, says Tom Rentschler, vice president of sales and marketing. The software offers functions typically found only in WMS packages. This can include receiving, put-away, replenishment, inventory tracking and cycle counting, and waving. “We can handle anything relating to fulfilling the order once it has been released to us from an ERP or order management system,” Rentschler says. Some clients have deployed Forte’s WES warehouse director module in place of a

ECT N N O C

OVER C S I D

0, h 8-1 c r a M

2015

WMS. “It’s getting its execution from an ERP,” Rentschler says. In many cases, the WES can supplement existing legacy WMS or enterprise resource planning warehouse modules and eliminate the need to invest in a new WMS package, he says. “A lot of companies don’t need all the functionality a tier 1 WMS provides,” Rentschler says. “Fully implemented, it (tier 1 WMS) is certainly more than a million dollars for most companies and could be quite a bit more than that.” Specific concerns building interest in both WMS and WCS solutions are: food safety regulations, a need to replace legacy software, and the dynamics associated with order fulfillment in a multi-channel distribution world. For companies to deploy new technologies successfully, they need to have a technology implementation plan, according to logistics consultant Tony Vercillo, Ph.D. Vercillo notes that half of warehouse technology implementations fail, usually due to poor planning. At many companies, the supply chain function lags the commercial side of the business when it comes to capitalizing on the power of analytics, the MHI report notes. As technology evolves, the supply chain will play a bigger role in determining a company’s success. ◆

arb ah H n n a av tin S Wes

For more information: AFS TECHNOLOGIES, 877-821-3007, afs.com CASESTACK, 866-828-7120, ww2.casestack.com FORTE INDUSTRIES, 513-398-2800, forte-industries.com HIGHJUMP SOFTWARE, 800-328-3271, highjump.com JDA SOFTWARE, 888-441-1532, jda.com KNAPP LOGISTICS AUTOMATION INC. 678-388-2880, knapp.com LOGFIRE, 678-261-9000, logfire.com MANHATTAN ASSOCIATES, 877-596-9208, manh.com MATERIAL HANDLING INSTITUTE, 704-676-1190, mhi.org POWER AUTOMATION SYSTEMS, 209-249-1616, powerautomationsystems.com PRISM LOGISTICS, 925-838-1691, prismlogistics.com RETROTECH INC., 585-924-6333, retrotech.com SOFTEON, 703-793-0005, softeon.com SSI SCHAEFER, 800-876-6000, ssi-schaefer.us TRANSTECH CONSULTING, 614-751-0575, transtechconsulting.com VIASTORE SYSTEMS, 616-977-3950,viastore.com

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M I D W E S T

E C O N O M I C

D E V E L O P M E N T

Kentucky Offers Tasty Incentives For Food & Beverage Companies Access to a world-class multi-modal infrastructure and a generous state economic development program are just a few. BY CYNTHIA Y. MCCANN

nce a year, adrenaline pumping, hoof stomping, pure American entertaining horse racing takes place at Churchill Downs in Louisville, Ky. In just over two minutes, the culmination of generations of selective breeding, training and culture, manifests in what is known as the Kentucky Derby, the pride of the commonwealth. With its lush bluegrass pastures and horses that are almost celebritized, Kentucky has a lot to be proud of. It is home to America’s only native spirit, bourbon whiskey—a $3 billion per year global industry—along with a thriving agricultural mecca and a world-class domestic and international transportation and distribution hub. The initial attraction to what was to be Kentucky, in early settler days, was its unusually rich fertile land. Geologically, over 50 percent of Kentucky rests on limestone rock. It is said that horse breeding in Kentucky has been optimal because the horses’ bones are stronger and healthier due to feeding on grass that is nourished by the high calcium rich mineral content in the soil. Interestingly, the limestone is what

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Logistics is a key attraction Logistically speaking, Kentucky has long been an important transportation and distribution hub in America. Kentucky is old school America, with its roots steeped in Civil War history. It was a “neutral” state geographically, situated right between the North and South, connecting the two. At that time, tobacco, flour, snuff and whiskey made up Kentucky’s economy. The Ohio and Mississippi rivers were used to transport goods to the South and the rail system was used to transport goods to the North. Today, Kentucky remains a key logistics hub for the U.S. interior. With its central location, Kentucky offers domestic and international businesses access to a 34-state distribution zone containing two-thirds of the U.S. population and reachable within a one-hour flight or oneday drive (600 miles). The food and beverage sector is taking notice. Businesses in this sector are relocating or expanding operations to Kentucky, while others have been there for years. A sampling of companies includes Yum! Brands, Inc. (the parent of Kentucky Fried Chicken, Pizza Hut and Taco Bell), • Charring whiskey The Schwan Food Co., barrels at BrownTyson, Papa John’s Pizza, Forman Cooperage. Nestle, A&W, ConAgra Old No. 7 refers to Foods, Kellogg’s, J.M. Jack Daniel’s Old No. 7 Tennesse Whiskey. Smucker Co., Sara Lee

• FOOD LOGISTICS

Foodservice, Pepsi Cola, Coca-Cola, along with bourbon makers Jim Beam, Maker’s Mark, Buffalo Trace, Wild Turkey, Four Roses, Wilderness Trace, and Brown-Forman Corp., whose portfolio of spirits includes the first distilled bourbon whiskey (Old Forrester) as well as Woodford Reserve and Jack Daniel’s, to name a few. Brown-Forman is also one of the world’s largest producers of whiskey barrels— making over 600,000 barrels annually at its own cooperage in Louisville, with roughly 85 percent of those barrels used for Jack Daniel’s Whiskey. So why Kentucky? Kentucky gives the food and beverage industry agricultural support for the raw materials it needs, including corn, soybeans, wheat, dairy farms, egg hatcheries, goats and beef cattle. There are more than 85,500 farms and almost 14 million acres of dedicated thriving farmland. Once the raw goods are cultivated and turned into products, the numerous container and packaging plants, as well as refrigerated warehousing operations, are set to take over.

Photo: Cynthia Y. McCann

also creates the mineral-rich soil that is perfect for growing bluegrass, thus the nickname, “The Bluegrass State.” The mineral rich limestone also makes Kentucky bourbon special, a la its terroir. Purists in the bourbon industry claim that bourbon isn’t bourbon unless it’s made with iron-free limestone water. The limestone removes the iron that can give liquor a bad taste and adds good minerals that create the unique and distinctive flavors of bourbon. Some bourbon distillers even specify that the barrels must be made from oak trees grown on a limestone shelf.

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There are 5 million barrels of Bourbon aging in Kentucky – the largest inventory since the 1980s. Meaning there are more barrels of Bourbon in Kentucky than people.

More than 1 billion eggs come from Kentucky hatcheries each year, which is enough to feed everyone in North America breakfast.

Kentucky produces 38 million pounds of Mini Babybel® and Laughing Cow® cheese, which is equivalent to the weight of 25,333 Holstein cows.

Kentucky produces one million beef cattle a year, enough for 28 million people to have rib-eye steak for dinner.

It takes about 188 billion peanuts to equal the amount of Jif® peanut butter produced annually in Kentucky.

Kentucky dairy cows produce 130.1 million gallons of milk a year, enough for more than 93 million gallons of ice cream.

Kentucky produces enough Dippin’ Dots® ice cream annually to fill nearly five Olympic-size swimming pools.

Louisville, Kentucky supplies kitchens around the entire world with Reynolds Wrap® aluminum foil.

GROWING AND MAKING QUALITY PRODUCTS FOR OVER 200 YEARS

KENTUCKY What makes Kentucky the perfect location for food and beverage industries? It’s simple: we grow it, we manufacture it, we ship it and we headquarter it. Plus, we’re within 600 miles of 65 percent of the U.S. population, making us a logistical dream to move your products to all corners of the world. Visit ThinkKentucky.com to explore the many options Kentucky holds for you.

www.foodlogistics.com

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ThinkKentucky.com | (800) 626-2930

FOOD LOGISTICS

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Photo: Cynthia Y. McCann

• Taking a closer look at live lobster at the Clearwater Fine Foods (USA) facility in Louisville, Ky.

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• Bottling line at Jim Beam’s Distillery.

Photo: Cynthia Y. McCann

Transportation infrastructure is another incentive for investing in Kentucky. Businesses have access to 19 interstate highways, plus controlledaccess parkways, and 2,760 rail miles served by three Class I railroads — CSX, Canadian National (CN) and Norfolk Southern (NS) — and other regional railroads. The Ohio and Mississippi rivers, along with seven public river ports, create an easy barge thoroughfare along 1,100 miles of navigable waterways. Ongoing investments in intermodal freight facilities are also supporting the transportation of goods. In addition, the state offers five commercial airports and multiple regional airports. Two major air cargo hubs, one operated by UPS and the other by DHL, are located at Kentucky’s two international airports, Cincinnati/Northern Kentucky International (CVG) and Louisville International Airport (SDF). One company taking advantage of the air cargo capabilities is Louisville, Ky.-based Clearwater Fine Foods (USA) Inc. The Louisville location serves as a lobster holding facility for fresh lobster caught by Clearwater Fine Foods in Nova Scotia. The company came to Louisville in 1999, when UPS opened its UPS Worldport facility at SDF. Clearwater specializes in live lobster, an extremely delicate and perishable product. At their Louisville facility, the company created an ocean environment that closely replicates both the temperature and salinity that lobster requires to stay healthy. “There’s a lot of process that we go through to make sure that we have the best lobster for our customers. We go above and beyond,” says Paul Valdez, operations manager. Clearwater can ship a lobster within the same day if needed. The company uses several air carriers, including UPS. Every day at 5 p.m., UPS arrives to pick up that day’s lobster shipments, which are then transported to a special dedicated holding section. In order to reduce stress on the lobster, movement is kept to a minimum, and transport on conveyor belts are avoided.

UPS Worldport was created from a smaller UPS sort facility. It now ranks as the largest, fully-automated package handling facility in the world. On an average day, the facility turns 130 cargo aircraft and processes 1.6 million packages. Currently, 416,000 packages move every hour, but the goal is to boost that figure to half a million. Chicago, Ill.-based Newly Weds Foods is an international manufacturer and distributor of food ingredients, breadings, batters, seasonings, rubs and marinades. They make food coatings at their new 326,000-square-foot food manufacturing plant in Northern Kentucky. The company enjoys access to various resources, logistics options and workforce. The site also puts Newly Weds Foods in close proximity to its customers. With assistance from the state government, five different state organizations work together to create a highly trained and skilled workforce to support Kentucky’s businesses. “The workforce is diverse, demographically. You have many Ph.D.’s and folks with Masters

• FOOD LOGISTICS

degrees, and you have Kentuckians with high school educations,” notes Joe Lilly, executive director of the Kentucky Cabinet for Economic Development. The Kentucky Skills Network was created for businesses that need help getting special or specific training for their workers. Worker productivity in Kentucky is rated “above average,” which is also attractive to business. In the meantime, Kentucky Gov. Steven L. Beshear is an active and driving force in overhauling Kentucky’s tax code. His goal is to make Kentucky one of the most competitive states in the U.S. The Kentucky Cabinet for Economic Development (www.thinkkentucky.com) has developed the Office of Entrepreneurship specifically to help aid business development, either starting from the “idea” stage or assisting a fully developed business that needs help making connections or gaining access to the right resources. In addition, the Kentucky Economic Development Finance Authority (KEDFA) was set up to provide financial assistance and tax credit programs for businesses. One company that used KEDFA’s resources is ZoomEssence, Inc., a food technology company. The company’s DriZoom technology delivers liquid quality flavors and ingredients in a powder form, without the use of heat. ZoomEssence tapped into the state’s tax incentives, guidance and investment options to expand its operations in Kentucky. KEDFA provided the company with investment funds of up to $175,000, and $300,000 in tax incentives to be used over a 10-year period. A complete list of Kentucky Business incentives is available online at www.thinkkentucky. com/kyedc/pdfs/kybusinc.pdf. The state ranks high on other key considerations for businesses. Kentuckians are known for their strong work ethic and their “can do” spirit. It also boasts the fourth lowest industrial electricity rates in the nation. The cost of living in Kentucky is one of the lowest in the nation. Housing cost is 30 percent below the national average. There are eight public universities, 20 independent higher learning institutions and 16 community and technical colleges. Kentucky is attractive to business—and the people who live there. The state is a hybrid of sorts—it’s located in the Midwest but definitely has a southern flair. Imagine a gentle Kentucky rain, bluegrass pastures, bluegrass music playing in the background, relaxing on your porch, holding a snifter of good ol’ Kentucky bourbon—yes, this is a fine place to call home. ◆ Cynthia Y. McCann is a Los Angeles-based photojournalist, whose work has appeared in several B2B supply chain journals, including World Trade WT100 and Food Logistics. Her artwork was recognized on the front page of The Los Angeles Times as part of the newspaper’s coverage of the Surfin’ Hermosa art exhibit in 2004. www.foodlogistics.com

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FL100+ VENDOR SHOWCASE

The 2014 FL100+ marks the 11th consecuritve year that editors of Food Logistics have profiled leading software and technology providers whose products and services support the global food and beverage supply chain, from helping to reduce food waste and extending the shelf life of perishables, to facilitating the safe and sanitary transportation of product while assuring regulatory compliance. With innovation in the software and technology sector progressing at such a fast rate, the

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providers profiled in the 2014 FL100+ have truly risen to the top against the competition. On the following pages, you’ll learn about four of those companies who earned a spot on the 2014 FL100+ list—KNAPP, Plug Power, Power Automation Systems, and Supply Chain Services. Take a few minutes to learn about these four providers and how they are helping to create efficiencies, improve accuracy and enhance visibility for their customers’ supply chains. – Lara L. Sowinski, Editor-in-Chief

www.foodlogistics.com

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FL100+ VENDOR SHOWCASE

Refrigerated Logistics Gets Hot In the refrigerated logistics industry, working in extreme environments is part of business. With sub-zero temperatures in storage spaces, workers need data collection technology that's able to withstand extremely cold temperatures, while also being durable, reliable, and long-lasting. RLS Logistics has revolutionized its processes with rugged forklift mounted computers -- also referred to as a vehicle mount unit (VMU). The VMU provides unprecedented flexibility in data collection -- and breakthroughs in logistics productivity. Freezer-rated to -22 degrees, it's a very reliable device for the reefer industry, featuring a quick-mount smart dock which allows drivers to un-dock and re-dock the unit on different forklifts without missing a single transaction. As a 3PL in the food industry focusing on warehousing, packaging, fulfillment, cross-docking, and transportation, RLS utilizes the VMU for materials movement operations. It enables operators to more efficiently and accurately fill orders, with long-range scanning to help forklift drivers capture item information from their vehicle instead of wasting time by disembarking for closer scanning. Since introducing the VMU into its refrigerated warehouse, RLS has increased the speed and accuracy of receiving, storing, picking, and packaging product, successfully shipping hundreds of thousands of orders nationwide -- all while improving their perfect order rate. RLS Logistics accelerates operations using forklift computing technology that gives them greater flexibility and reliability in their refrigerated warehouses. Vehicle mount computers and long-range barcode scanners provide forklift operators unprecedented breakthroughs in logistics productiv-

ity. To achieve their perfect order rate goal, the device gives them the accuracy they need to deliver customer orders complete, with the correct product and quantity, on time, damage-free and invoiced correctly. The vehicle mount computer with a long-range scanner attached helps forklift drivers: • Reduce interruptions of leaving the vehicle to scan a barcode • Increase speed and accuracy of put-away and picking • Improve customer responsiveness • Achieve perfect order fulfillment goal • Improve reputation for reliability • Reduce labor costs In addition, a single IT manager is responsible for supporting technology for 15 million square feet of operations at five locations. IT overhead has been minimized through remote mobile device management and partner support. In short, they're doing more with less. Implementation and support for the vehicle mount solution was provided by Supply Chain Services, an award-winning provider of data collection solutions. When it comes to food logistics, Supply Chain Services analyzes business processes to determine the right tool for streamlining an organization. In this case, the vehicle mount computer was just that tool.

7800 Third Street North, Ste 920, Oakdale, MN 55128 info@supplychainservices.com | 866-205-4310

supplychainservices.com www.foodlogistics.com

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FL100+ VENDOR SHOWCASE

Four Top Tips for Distribution Center Automation Most everyone on the demand side of retail understands that today’s customers are pretty darned demanding; not only are consumers empowered by their ability to research products and services, but they aren’t afraid to let the CEO know about their pleasure – or their pain! Driven by these changes, we’ve all been immersed in the consumer revolution, the increasing shift to eCommerce and same-day shipment. So, how do we address rapidly changing needs with notso-rapidly changing automation? Our approach has been to invest in R & D, resulting in the invention of the Shuttle, leading edge vision solutions, leadership in track, trace and serialization – and leadership in the deployment of broken case robotic order picking cells! Along the way we’ve also developed some tips for leveraging technology and dealing with the changes in consumer power.

Tip 1: Simplify Automation Reconsider strategies that utilize a wide array of traditional technologies for handling pallets, cases and each picking. Simplifying technology across the enterprise is a lean strategy that can result in lower labor costs, faster cycle times and lower overall costs. A great example of this technology is to combine AS/RS cranes and OSR shuttles; seamlessly handling pallets, cases and high-speed order picking of eCommerce orders, and creating mixed load pallets in store-aisle sequence.

Tip #2: Inventory Control and Order Management Should be a Distributed Strategy

content, increase labor and other DC resource performance while also reducing distribution center footprint and the cost to process, ship and return orders.

Tip #3: Leverage New Developments in Vision, Robotics & Software Let’s face it, the effects of regulation in the U.S. is driving a renewed interest in track and trace, and the need to quickly identify, purge or suspend orders at any time – if you identify health threats in your supply chain. At Knapp, our leadership in the Pharma & HBA supply chains has given us unique perspectives – and solutions. Whether you need automated dispensing technologies for HBA items or Pharma-related goods, the addition of vision and robotic automation is providing a competitive advantage to leading retailers. And software, realtime controls and ultra-fast software and controls modules are central to the successful implementation of these technologies.

Tip #4: Bigger is Not Better We’ve all come to understand that sustainability is very important to the U.S. consumer. At Knapp we’ve also studied this problem and engineered a strategy that employs intelligent design, software and automation to maximize building space utilization and carbon footprint – to reduce the size of a facility and the consumption of resources. For example, when you can use intelligent software design to significantly reduce conveyor systems size, minimize electrical consumption and operating costs – that’s a winner! Interested in discovering how Knapp can deliver a competitive advantage for your business? Visit us at Promat, March 23-26 in Chicago, or contact Kevin Reader, kevin.reader@knapp.com to schedule a meeting.

We’ve come to the conclusion that best-of-breed inventory management should be a distributed application. Why? Because history has proven again and again that the ability to allocate inventory, orders and other warehouse resources is significantly empowered when it’s done in real time, and within microseconds or milliseconds. Why is it more powerful? Because we can reduce equipment

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• FOOD LOGISTICS

www.foodlogistics.com

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knapp.com

E-Grocer

Efficient picking solutions for e-commerce food distribution

KNAPP has ideal solutions specially designed for food distribution ordered online, covering typical challenges of this market segment, such as minimal order throughput times, flexibility and fast, ergonomic picking of small quantities in sequence at dedicated Pick-it-Easy work stations. KNAPP E-Grocer solutions based on OSR Shuttle technology increase productivity as proven by leading companies in this fast growing market. Contact us to learn how KNAPP can increase your profit and provide a competitive advantage for your company in the online food retail business.

KNAPP Logistics Automation, Inc. | 2124 Barrett Park Drive, Suite 100 | Kennesaw, GA 30144 +1 678 388 2880 | sales.us@knapp.com | knapp.com/us

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FL100+ VENDOR SHOWCASE

PowerStor 4000 Data Sheet

Because Every Warehouse Deserves Automation The leader in innovative warehouse automation technology, Power Automation Systems (PAS), has released the latest in its PowerStor line with the PowerStor 4000. The PowerStor 4000 is tailored to provide an attractive ROI for companies with small to medium storage needs. This adaptive, fully automated system can retrofit to existing space to maximize density and efficiency in your current warehouse.

Who is the PowerStor 4000 designed for? Midmarket organizations with medium-to-small storage position requirements

Organizations that need to expand but face the following obstacles:

Operations with low-to-medium throughput demands

Warehouse is landlocked

Unusual floor plan

High density

What are the beneďŹ ts of PowerStor 4000? The PowerStor 4000 can be implemented into a building of any shape. Allows costs to match exact performance requirements. Modular technology allows for easy addition of extra units. User-friendly installation

Reduces labor costs

Eliminates need for forklifts

Flexibility

Decreases storage waste

Adaptability

Reduces consumption

Sustainability

Lowest Total Cost of Operation

The PAS OS 3.0 software is customizable to your businesses needs. Provides real time reports that reflect absolute accurate inventory control.

For more information on PowerStor 4000 technology and whether it is right for your business, contact PAS

209.249.1616 56

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â&#x20AC;˘ FOOD LOGISTICS

powerautomationsystems.com www.foodlogistics.com

2/13/15 10:43 AM

FL100+ VENDOR SHOWCASE

Capturing Sustainability and Productivity

Benefits of the Hydrogen Economy Hydrogen fuel cells are a hot topic right now, as more companies join the effort to benefit from the hydrogen economy. We’ve all seen headlines about the hydrogen fuel cell vehicles being brought to market. And we know that installation of new hydrogen fueling stations is not far behind. Plug Power, a hydrogen and fuel cell system manufacturer, supplies hydrogen fuel cells to distribution centers and manufacturing facilities. Plug Power’s GenDrive™ fuel cells are enabling an ever-increasing number of food logistics organizations, beverage distributors, grocers, big box stores, auto manufacturers, and other companies to switch their material handling forklift fleets over to hydrogen fuel cell power. As a clean energy solution that replaces lead-acid batteries, hydrogen fuel cells remove lead and sulfuric acid contamination from the work environment and contribute to sustainability programs. Fuel cells also increase efficiency and production uptime. Refueling of GenDrive units takes only minutes and is done by lift truck drivers at hydrogen fuel dispensers installed onsite. The only by-products generated are heat and water. One of the most favorable attributes of hydrogen fuel cells is their consistent, dependable performance in cold-storage applications as low as -20 degrees F – an environment that negatively impacts lead-acid batteries.

It’s a key reason so many material handling customers with refrigerated warehouses have turned to GenDrive to power their forklifts. Today, Plug Power has over 90% market share of the hydrogen fuel cell power used by fleet vehicles in distribution centers and manufacturing facilities. Plug Power customers in the food logistics industry include: Associated Wholesale Grocers, Central Grocers, Coca Cola, Kroger, Nestle Waters, Newark Farmers Market, Sysco, United Natural Foods, Walmart, Wegmans, Winco, and Whole Foods. In 2014, Plug Power introduced GenKey™, a singlesource solution designed to help customers seamlessly transition to hydrogen fuel. Plug Power serves as the expert vendor for full onsite integration and deployment of its fuel cell systems. The entire GenKey solution includes: GenDrive fuel cell units, GenFuel™ hydrogen fuel storage and dispensing infrastructure, and GenCare™ monitoring and maintenance service. Already, over one dozen GenKey deals have been closed, with more on the horizon. The era of hydrogen technology is here, with increasing demand for growth and development of hydrogen fuel cell usage. Food & beverage distributors, retailers and manufacturers are taking advantage of the reliable power delivered by Plug Power’s hydrogen fuel cell equipment. Plug Power solutions are significant because they allow customers to maximize operational efficiencies, reduce the load on an aging electrical grid, increase productivity levels, reduce operating costs and decrease the environmental impact of warehouse operations on local communities. Plug Power is honored to be named to the FL100+ list in Food Logistics magazine – which recognizes technology innovators who influence global food and beverage supply chains and support growth, productivity and efficiency within the industry.

For more information on how to POWERAhead to a hydrogen fuel cell solution, please visit the Plug Power website.

www.plugpower.com

www.foodlogistics.com

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FOOD LOGISTICS

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FOOD (and More) FOR THOUGHT

CLINT LASHER

Finding The Perfect Fit On The Warehouse Automation Spectrum

ome wasn’t built in a day, as the saying goes. It was a centuries’ long process that involved a lot of heavy lifting, intricate carving, innovative design and incremental—but thoughtful—expansion. Over time it all came together to create an epic empire that appeared almost as if carved from a single gleaming block of marble. Just like building one of history’s most revered cities, automating your warehouse doesn’t have to happen as an all-or-nothing proposition. It can be a process where each piece seamlessly builds on the others, improving the system with each step and bringing you closer to a warehouse that perfectly suits your organization’s unique needs. Companies choose automation solutions for many reasons, including labor issues, increasing order fulfillment speed and accuracy, and reducing the cost of goods sold and improved inventory density. The key is to find the right level of automation for your company’s needs at an investment level and time frame that works for you. By carefully assessing your company’s requirements, you can determine where your warehouse fits on the automation spectrum.

Assess the solution, then take the leap Companies that haven’t integrated any automation into their warehouses hesitate for several reasons. Some don’t see the purpose if they feel that manual operations are working just fine as is. Others fear that an automated solution lacks flexibility for the ebb and flow of retail order demand. In many cases, companies simply can’t justify the expense of a fully-automated warehouse. The most effective warehouses, however, recognize the advantages and integrate automation in the areas where it makes sense, creating an environment that is ultimately more streamlined, adaptable and cost-efficient. Sortation, automated storage and retrieval, goods-toperson and robotics are among the automated elements that can be

ADVERTISER INDEX ADVERTISER...............................PAGE

ADVERTISER...............................PAGE

Cubic Designs................................................... 15 Food Logistics Webinar Series.................... 59 Fresh Logistics Asia......................................... 33 Great Dane Trailers.......................................... 60 HAWKER.............................................................. 17 Infratab................................................................ 28 Inmar.................................................................... 35 Interlake Mecalux...............................................9 International Warehouse Logistics Assn.................................................... 47 Kentucky Economic Devevelopment...... 49 KNAPP Logistics Automation Inc.........54-55 Landoll Corp...................................................... 39 Logistics & Supply Chain Expo................... 51 McCook Cold Storage.................................... 24 MercuryGate..................................................... 13 Old Dominion Freight Line, Inc............44-45

Plug Power......................................................... 57 Power Automation Systems/PAS............... 56 ProMat 2015...................................................... 29 Raymond Corp................................................. 37 Retrotech............................................................ 27 Rubbermaid Commercial Products LLC.....5 Ryan Companies US, Inc............................... 11 Save-A-Load...................................................... 31 SSI Schaefer....................................................... 25 Starke Material Handling Group................ 41 Supply Chain Services................................... 53 Swisslog.............................................................. 23 Uline..................................................................... 40 Utility Trailers...................................................2-3 Viastore Systems.............................................. 43 Volvo Trucks..........................................................7 Witron.................................................................. 21

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• FOOD LOGISTICS

incorporated into systems. Starting with a thorough assessment of your operations will help you determine which areas could be more efficient and how automation can help accomplish your goals. Say your company has a halfmillion SKUs, but you don’t want to put all of them into automated processes. You can apply automation just to a subset based on velocity while still running the LASHER rest through the warehouse manually. Targeted automation can also help your warehouse function with greater agility. Places in the warehouse with a high concentration of workers is a good place to start looking at automation because even a small degree can improve efficiency and accuracy. Rather than pulling in extra employees during peak seasons, you can up the system’s throughput without investing in additional training or worrying about a drop in accuracy. Automation also increases safety for employees by improving ergonomics and cutting down on repetitive motion that can lead to stress injuries. On the other end of the spectrum, companies that are already well-versed in automation are increasingly adopting a goods-to-person approach. Letting machinery select items and bringing them to the worker eliminates a lot of movement and makes it very simple to pick the right product. As companies improve accuracy and efficiency, naturally they start saving money in their warehouses, too. The cost of slowly or incorrectly picked orders adds up over time, so in this example, a directed picking or goods-to-person automated solution, even a partial one, can lead to great long-term savings. Companies that take the leap, however slowly at first, eventually become advocates for automation once they see the degree to which it improves operations. A few years ago, a major retailer with a fully-manual warehouse decided to dip its toe into automation with an automated pick-andput solution. Earlier this year, it deployed unit sortation, as well as some buffer and sequencing applications. The adoption of automation, even at a slower pace, has had a positive impact on the bottom line as the business grows. Now, it’s a bit of a chicken and the egg scenario—business has been able to grow because automation makes order fulfillment more efficient. The growing business means that the retailer may need to invest in even more automation. Every six to eight months, after thoughtful and thorough evaluation, the company may add another automated element to its warehouse. Once managers become comfortable with their initial automation investment, they frequently start thinking about what else they can do to make operations run better, harder and faster. ◆ Clint Lasher is divisional president, engineering and integration, at Oak Lawn at Wynright Corp., a wholly-owned subsidiary of Daifuku Webb and a provider of intelligent material handling systems. www.foodlogistics.com

2/13/15 10:45 AM

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DETAILS & REGISTRATION: FOODLOGISTICS.COM/WEBINARS TIME: 1:00 P.M. ET/ 1 2:00 P.M . C T / 11:00 A.M . M T / 10:00 A.M . PT

Wednesday, November 4

Wednesday, September 23 Wednesday, May 27

Software & Technology Part 1

3PLs

Ports & Ocean Wednesday, August 26 Cold Chain Carriers _________________

_________________

Third-party logistics providers are a key strategic and competitive asset for many companies in the food supply chain. Learn how to develop a more collaborative working relationship to “get more” from your 3PL.

Ports and ocean carriers are a key link in the global food supply chain as imports/exports continue to rise. Explore how leading food/bev shippers evaluate ports and carriers and what considerations are important.

The global food supply chain depends on an integrated cold chain to support time- and temperature-sensitive shipments. This educational webinar reveals some of the latest cold chain innovations in this growing sector.

From TMS and WMS solutions to new products and equipment, software/ tech is driving safety, efficiency, compliance and visibility throughout the food supply chain. Expert panelists discuss key developments in this fast-moving sector.